China's 3 challenges by Sachs

You can find the whole speech here

First, demography. It is a good thing that population growth is slowing down in Asia. The one child policy has been extremely important for economic development and ecological survival in China. It is not a good thing that India is getting back to where it was in 1AD and that is more populous than China. Now, however, with the multiplication of perhaps 30 fold of the population I have not made the calculation but India will overtake China in population probably by the year 2050, reaching perhaps 1.6 billion people to China’s 1.5 billion on the most recent median variance of the UN population division.

This is no great prize that anyone would want. Trying to find prosperity for 1.5 billion people in India, or 1.4 billion in China, is not something that you can do. The faster the basic demographics get under control the better for these societies and the better for the world because the environment stresses are also phenomenal. The more we also attend to the remaining parts of both the Chinese, Indian and rest of Asia economies, the more reliably we’ll be completing the demographic transition, stabilisation of population and improving health conditions. So, we should remember that even though China is as dynamic as it is there are hundreds of millions of very poor people still largely invisible in the countryside. But they’re there, they’re very poor and there still is that huge demographic challenge of addressing rural poverty in China. And I know, I’ve been working with the Chinese government over the last three years on western development issues. This is not an easy task to accomplish.

The second major challenge I would mention is politics. China does not have a political system yet that is compatible with its long term aspirations of development. China has, what I think probably fairly could be said to be, the most successful model of statecraft when looked at over a 2,000 year period. And that is the centralised bureaucratic administration that led to long stretches of peace and relative unity but it is not compatible with a modern society.

There will need to be change in China over the coming decades and there will be democratisation in China but how it happens and in what context it happens is a major question for the world as well as for China.

But one thing is clear, the Chinese statecraft model which is so deeply embedded of a central authority, a professional skilled bureaucracy, reaching down to the villages, that is fine for a sedentary village based society as China was for 2,000 years. It is not compatible with a mass mobility, knowledge-based society where you need local governance and you need local representation, you need legitimacy in new ways and it’s not just administrative management over the sea of a million villages. It is something quite different and that’s the great political challenge that China faces.

Third, there is also a mammoth political challenge. It’s going to be one of the most important issues that our current generation of students will face and that is the difficult problem of the great rising powers. Will the United States accept the rise of China’s power and India’s power smoothly in the next decade? Will India and China act in a way that facilitates that transition to whole development?

And I raise this because while the Meiji Restoration is the best analogy for what’s happening right now economically in China, one of the aftermaths of the Magee Restoration was the Pacific war. And while there is no linear relationship certainly from one thing to the other rising powers, whether it was Germany or Japan, always challenged and threatened the already leading powers and the accommodation of rising powers by leading powers is one of the most difficult things to accomplish in geo-politics.

So, already we have a far right in the United States that talks about containing China, which is a pretty ridiculous concept of course because how are 280 million people going to contain 1.3 billion people anyway? It’s ludicrous. But lots of ludicrous things are believed in the world. I sometimes wonder whether any rational things are believed in the world.

But, in any event, this question about whether China will be given the space to develop, because it will mean overtaking the US economy in absolute size without question, will that happen smoothly? “Will it be allowed by the United States?” or will there be mutual recriminations and I what would, at this point, be a world devastating conflict.

Well, we didn’t handle this well in the 20th century at all. We handled it quite disastrously two times, Britain and Germany fought World War I and the US and Japan and Germany fought World War II. There were others involved as well but both involved fundamentally the problems of rising powers who felt that their place in the sun was being threatened, rightly or wrongly, in a paranoid way or not, by others that were in the lead.

And this is the great geo-political challenge. Helping to explain to the world that China’s prosperity is good for the world, not dangerous for the world. Helping to explain to the American people that the development of Asia is a wondrous and one of the great world stabilising features, not some threat out of outsourcing and all the things we’re hearing now. And if this is the glimmer that you hear with the first 200,000 jobs created in India imagine what we could hear in decades ahead. We’re just not very good at this, as a human species, of trusting others and accommodating mutual interests and acting in an empathetic …