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China en route to capitalist market?

Written by: Staff

Shanghai, China, Sep 17: Is China transforming from a communist market into a capitalist one? Though officials describe the process as towards a ''socialist market economy'' -- imperative to emerge as the top economic power -- the Chinese system has begun showing symptoms usually linked with capitalist markets.

Economic disparity, stock manipulation, migration of peasants to towns, poverty, prostitution, growing materialistic needs and Internet-linked pornography are among capitalist-flavoured problems cropping up in China's system.

These are more discernible in China's commercial hub, Shanghai -- the epitome of China's modernisation with a high standard of development testifying its competence to overtake the US on the economic front.

Officials do not term this a ''march'' towards capitalism, saying they may be ''side-effects'' of exposure. ''China changed from an agricultural to an industrial society and from a planned to a marketing economy.'' Drawing a contrast between socialist market economy and capitalist economy, they say, ''people's desire guides our market economy, while this factor is missing in the western capitalist market, where the motive is high profit margins. Most of what we earn in Shanghai goes to the central coffer to fund public welfare.

''In 1980, China achieved growth and remained insulated from the influence of the Asian financial crisis, thanks to our socialist economy. Major ups and downs are typical of the capitalist market.

The Chinese economy has the capacity to absorb any such fluctuations.''

According to the Beijing-based State Council Information Office Vice-Minister Qian Xiaoqian, 20 million people have been brought above poverty line, through a socialist economy, leaving only 30 million -- a negligible figure when viewed against China's population. Meanwhile, the government has embarked on an ''information campaign'' to gear up media coverage, apparently to dispel misconceptions.

Recognising the role of the press as facilitator in the world of transparency, it has started opening up state-controlled media and that is reflected in newspaper columns carrying criticism and negative articles.

As the interest of workers is paramount, it has been made mandatory on part of even private foreign companies to have trade unions. ''No doubt these unions are affiliated to the ruling communist party, but there is no government interference in affairs of private companies,'' says Mr Ma Xueje of Shanghai's Pudong -- a new economic zone that attracts the highest number of international investors as per global norms.

Wal-Mart, after years of negotiation, had to succumb to the suggestion for formation of a union to initiate operations on Chinese soil, he adds.

Though Mr Xueje says there are no exceptions, Infosys CEO and MD James Lin says his company in Pudong is functioning sans any union.

''The China market offers plenty of opportunities. Most foreign IT firms feel more comfortable in China than in India because of better infrastructure and more competitive business. There is also good scope for IT companies in banking, insurance, energy, health and other industries,'' he adds.

Mr Lin, however, says ''though market shares of big companies in software outsourcing in India have dropped significantly after the entry of more players, overall profit has increased.'' Keeping in view high software services in India, which is ''going stronger than China in this field,'' Mr Lin, who served in India before shifting here, says his company arranged a six-month training and internship for 100 students from China at Bangalore.

After completion, 50 per cent were absorbed in ''our Chinese venture. This year, we propose to send a similar batch.''

Yet another challenge being faced by China is the need to improve education quality. According to a National Reform and Development Commission report, about 60 per cent of this year's over four million graduates may not get jobs. Though more and more Chinese are turning bilingual by gaining knowledge of both Chinese and English to brighten job prospects, language seems to be one of the main hurdles in the process of improving relations between China and rest of the world.

This is also preventing direct contact between Chinese and Indians, which is crucial for expediting efforts to build up Sino-Indian relations.

In certain provinces, the fast track of development and high cost of living have caused shortage of cheap labour, a key factor to keep the price of Chinese products lower and make them competitive in the world market.

Though prostitution is banned, officials do not rule out its existence. They also admit incidence of HIV in certain areas with ''outsiders'' acting as carriers but claim ''its rate is very low compared to the rest of the world. Many such cases are the result of blood transfusion.'' At ''China's No 1 street'' (Nanjing Road) visitors encounter groups of females trying to adopt new methods of making quick bucks by enticing tourists to tea or drinks at restaurants or bars and forcing them to cough up dough to pay ''inflated'' bills. Later, these females return to the eateries to claim the ''difference between inflated and actual rates.'' Two Lahore-based Pakistanis, who fell prey to such misadventure, unfolded the cheating game to a visiting Indian press delegation.

It is not uncommon to observe brokers striking deals between tourists and so-called prostitutes in the name of ''body massage''.

However, officials dismiss these as ''isolated'' instances.

To ward off the influence of the Internet, authorities have evolved a strategy covering social supervision, self-restraint by Net providers and administrative action.

The presence of beggars in shopping areas and plying of luxury cars indicate yawning economic disparity. However, officials point out that ''most of the mendicants are well-off but in the habit of begging.'' The ''artificially'' high prices of real estate, both in Beijing and Shanghai, also confirm manipulation. Other challenges being faced by Chinese society include layoffs, resettlement of farmers whose land gets acquired for industrialisation and large-scale migration of peasants to towns, exerting pressure on employment.

''The government provides vocational and professional education to displaced farmers, encourages private capital to develop areas of employment for retrenched employees and improves living conditions in rural areas to contain migration.'' Referring to malpractice such as inside trading, market manipulation and furnishing of misleading information by listed companies, Shanghai stock exchange spokesman Xu Ming says monitoring, surveillance and improved governance have been introduced.

He, however, discloses that no action could be taken thus far against offenders for want of evidence.

While officials say ''we welcome advanced expertise and are ready to have our market opportunities shared'' provided foreign companies comply with local laws, some foreign business leaders say ''it is for the Chinese government to decide whom to encourage.'' ''Shanghai is a blend of China's communism and market economy, a blend of Chinese and western elements, which can boast of high living standards in the wake of worldwide investment and business opportunities.

''An average family owns a 23 sq m flat instead of the earlier 4 sq m. The minimum living standard is 560 yuan (over Rs 3,000), the highest in China,'' says Mr Zhu Jianzhong, Director of Foreign Affairs, Shanghai Municipal.

The trend among youngsters to live separately after education, gaining employment or marriage, is telling on the condition of their parents, particularly in the wake of the one-child policy.

From September 1, Mr Jianzhong says, monthly pension of 460 yuan came into effect for those living for 30 years in Shanghai. Besides, the government is providing 50 per cent of the medical insurance fee.


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