New Left Review I/222, March-April 1997

Richard Smith

Creative Destruction: Capitalist Development and China’s Environment

The ‘Rise of China’ has been hailed as the most important trend in the world for the next century, and with good reason. While Russia and much of Eastern Europe sink into depression, Deng Xiaoping’s market reforms have turned China into the fastest growing large economy in the world. Since 1978 China’s economy has grown by an average of more than 9 per cent per year, and since 1991 by more than 11 per cent. China’s swift growth has been largely propelled, like its East Asian nic predecessors, by exports. China now produces half the world’s toys, two-thirds of its shoes, most of the world’s bicycles, lamps, power tools and sweaters. Furthermore, China’s exports are increasingly being powered by high-end products. Exports of machinery and electronics jumped by 60 per cent in 1995, becoming China’s top export category for the first time. China is also the largest recipient of foreign investment after the United States. More than $35 billion in direct investment poured into China in 1995, a record. And, after years of deficits, China is now racking up trade surpluses with the us approaching those of Japan. In 1995 us officials estimate that, counting goods sent through Hong Kong, China ran up a trade surplus with the us of close to $38 billion, following a $30 billion surplus in 1994. Overall, China amassed a $20 billion global trade surplus in 1995. Even if China’s growth rate slows considerably, there can be no doubt that early in the next century China’s gnp will inexorably march past that of the us, and China will once again, after a five-hundred-year hiatus, reclaim its place as the centre of the world economy, heralding the ‘Asian Century’. [1]

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