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April 21, 2009
China leverages financial crisis; maps out rise to recovery

China has announced plans to expand health care clinics, a source of some discontent.

Though China’s growth rate is sluggish compared to recent years, the country will likely play a major role as the globe tries to recover from the financial crisis — media reports have even referred to China as a “knight” who will rescue the world.

Ali Wyne is a researcher in Washington who writes at World Politics Review to assess how China is changing its strategies to plan for a more sustainable rise as a global power.

Signs of Strategic Recalibration in China

Several analysts have noted that China is leveraging the global financial crisis to increase its economic clout — for example, by going on a commodities “shopping spree,” contributing $40 billion to the International Monetary Fund at the G-20 summit, and pushing for a greater voice in reforming international economic institutions.

Recent developments, however, suggest that it is going further. China is using the crisis to step back and consider how it can rise in a more sustainable manner. That move is borne not only of its desire to be a world power, but also of its recognition that its strategy of roughly the past three decades — grow rapidly, worry about the socioeconomic consequences later — is no longer viable. Three developments merit particular attention:

1. China has decided to scale back its investments in Congo and Guinea in response to political instability there. Sino-African relations in recent years have followed a simple pattern: in exchange for building infrastructure in a given African country, China would receive commodities — minerals and oil, in particular — that it needed for its burgeoning economy. China would set up shop in even highly unstable countries if lucrative investment opportunities presented themselves.

Its change of course, then, is significant. Although China’s recalibration does not imply that it will invest less in Africa, it does suggest that China will factor future risks in its current investment decisions. Do not expect that shift in mentality to show up in the numbers — as Christian Hennemeyer recently noted, “despite the global slump, China-Africa ties have never run so deep.” Sino-African trade grew 30 percent annually between 2000 and 2008, going from $10.6 billion to $106.8 billion. Although that figure will likely continue to climb, where China invests will display increasing responsiveness to Africa’s politics.

Whether, as part of this reassessment, China changes its policy of arming Sudan and Zimbabwe remains to be seen. Going forward, the key for it will be to avoid the perception that it is a neocolonial power, following in the footsteps of Western countries from a century before.

2. China has announced a $125 billion plan to install a medical clinic in every Chinese village and a hospital in every Chinese city by 2011. The government has acknowledged that the country’s health care system is in urgent need of reform. The dismantling of state-owned enterprises and rural collectives during the 1980s and 1990s left much of the population without medical coverage. A November 2007 survey of 101,000 Chinese households by the National Bureau of Statistics found that Chinese ranked the cost of health care as their top concern.

The government’s plan leaves much to be desired. It does not, for example, address the incentives that doctors receive to sell drugs instead of administer treatment to their patients; consider the conflicts of interest of hospital owners who are concurrently entrusted with maximizing hospital revenue and implementing costly hospital reforms; or explain how the government intends to staff the newly proposed facilities with competent health care professionals given that medical education in China is still in its nascent stages.

Its deficiencies notwithstanding, the plan represents a serious response to a longstanding grievance of the Chinese people and a potential source of instability.

3. China has announced its first-ever “action plan” for protecting human rights. One could argue that it did so to deflect attention away from its restrictions on political freedoms at home — for example, closing down YouTube — and preempt the criticisms that it will doubtless receive when the anniversary of Tiananmen Square occurs less than two months from now. That China released a plan at all, though, and admitted that it “has a long road ahead in its efforts to improve its human rights situation,” is noteworthy.

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The views expressed by contributing bloggers do not reflect the views of Worldfocus or its partners.

Photo courtesy of Flickr user yuan2003 under a Creative Commons license.

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