Old guard can still reform China

Are we obsessing about [China's] rise when we should be worried about its fall?", asked academic Minxin Pei in a recent Foreign Policy article. Professor Pei thinks that, rather than worrying about how to contain a stronger China, it would be at least equally sensible to think about China's possible collapse or self-inflicted regime change in the light of the country's recent economic slowdown, bursting property bubbles, power struggles and political scandals.

This seems to echo the perennial theme of China's doubters. Among them, a leading light is Gordon Chang who has been serially predicting China's "coming collapse" since 2001.

Chang's arguments are that China seems to be turning xenophobic, pushing foreign investments away by insisting on "indigenous innovation". China is heavily dependent on trade but there are now more exporting competitors among the emerging economies. China's economy is contracting as its population ages. Moreover, the leadership is failing to respond to a rising tide of social change.

The problems highlighted are by no means exaggerated. Indeed, at the opening session of the 18th party congress, President Hu Jintao announced that reform, particularly fighting corruption, is a matter of life or death for the party and the nation. But China's problems must be put in context. Consider the following.

• The latest OECD report, "Looking to 2060: Long-Term Global Growth Prospects", suggests that, "China will overtake the euro zone in 2012 and the US within the next four years to become the largest economy in the world. By 2060 … the combined gross domestic product of China (27.8 per cent) and India (18.2 per cent) will be larger than that of the Organisation for Economic Co-operation and Development - and the total output of China, India and the rest of the developing world (57.7 per cent) will be greater than that of OECD and non-OECD countries (42.3 per cent)."

• According to a recent Economist article, "In the past 10 years … [China's] economy has quadrupled in size in dollar terms. A new (though rudimentary) social safety net provides 95 per cent of all Chinese with some kind of health coverage, up from just 15 per cent in 2000. Across the world, China is seen as second in status and influence only to America."

• Pew public attitude surveys show that a vast majority of the population (exceeding 80 per cent) remains broadly supportive of where the country is heading.

• Pei and Chang seem to disregard the fact that China's leadership has long realised that the country must undergo reform to stay relevant. Hence the dramatic change in direction in the current five-year plan towards slower, more balanced growth.