China is in trouble

China suffers from a myriad of economic, social, political and geopolitical problems, and is in a fragile state as it advances into the 21st century, fraught with complex danger and uncompromising enemies. This round will center on China's economic strength and China's economic woes. Since the late 1970s and with the reforms of Deng Xiaoping, China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role - in 2010 China became the world's largest exporter and the IMF estimates China will become the worlds largest economy by 2016. Xiaoping's reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China has implemented reforms in a gradualist fashion, phasing "5-year plans" in and out. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978, currently estimated at $11.44 trillion USD at PPP prices. The dollar values of China's agricultural and industrial output each exceed those of the US; China is second to the US in the value of services it produces. However, per capita income is below the world average at $8,400 USD at PPP prices (122nd worldwide). The Chinese government currently faces numerous economic challenges, including: 1. reducing its high domestic savings rate and correspondingly low domestic demand; 2. sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; 3. reducing corruption and other economic crimes; 4. managing the increase in wages and inequality properly and 5. containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and by 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of China's population control policy is that China is now one of the most rapidly aging countries in the world, which is having its own effect on China's economy. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and economic development, and is starting to become a serious problem. With only 7% of the world's arable land, China must feed 22% of the world's population. Moreover, China continues to lose farmland through soil erosion, decreased soil fertility, and steadily expanding urban encroachment. The Chinese Bureau of Statistics estimates that as of 2009, China's arable land stood at 1.83 billion mu (approximately 122 million hectares). This figure represents a significant decrease in amount of available arable land. One researcher, reviewing the reduction from 1996 to 2005, estimated the total reduction to be 7.96 million hectares. This is despite an increase in population of 90 million people. As compared with other developed nations, China has a lower ratio of arable land to population. China is estimated to have .10 hectare of cropland per capita while the US maintains .47 hectare per capita and EU maintains .69 hectare per capita. Rapid growth has also attributed to increased land pollution. As agricultural land use has decreased, the need for high grain output has increase. As a result, Chinese farmers have developed an over reliance on the input of chemical fertilizers and pesticides. The consumption of chemical fertilizers and pesticides has shown a pronounced increase over the last few years. Indeed, China's consumption of pesticides far exceeds the average level worldwide and China's consumption of fertilizers per hectare far exceeds safety limits of developed countries for agricultural application. This overuse of fertilizers and pesticides could result in a serious decline of agricultural production. Additionally, industrial pollution has contributed to the arable land destruction, some estimate up to one sixth of China"s arable land is polluted by heavy metals. China is the world's number one consumer of coal, number one producer of greenhouse gases, and produces more sulfuric dioxide and particulate matter than all of Europe. These compounds contribute to acid rain, which damages crops, changes soil composition, and pollutes waterways. China also faces high corruption and low economic freedom. In the 2012 Heritage Foundation/Wall Street Journal Index of Economic Freedom, China ranked 138th of 179, with a score (51.2, mostly unfree, just above repressed) lower than both global and regional averages. According to the Index, "Economic freedom in China rests on fragile foundations. The judicial system is vulnerable to political influence and Communist Party directives, and corruption is perceived as widespread. The party"s small leadership group holds ultimate authority, and direct control is exercised over many aspects of economic activity. The pace of genuinely liberalizing economic reform has slowed or stopped. The government has tried to counter the slowdown in global demand with expansionary fiscal and monetary interventions." According to the 2011 Transparency International Corruption Perceptions Index, China scored 3.6, ranked 75th of 182, or "highly corrupt", and from 2001-2006, China's score averaged 3.4, placing it in the bottom third of corrupt nations. According to a study by the Carnegie Endowment for International Peace, though the Chinese government has over 1,200 laws regarding corruption, the odds of a corrupt official being caught and punished is less than 3% out of 100%. The amount of money stolen through corruption scandals has risen exponentially since the 1980s. Corruption in China is concentrated in sectors with extensive state involvement, such as infrastructure projects, real estate, government procurement, and financial services. The absence of competitive political process and free press make these high-risk sectors susceptible to fraud, theft, kickbacks, and bribery. The direct annual cost of corruption in China is estimated at $86 billion USD, though the cost of indirect costs of corruption (efficiency losses; waste; and damage to the environment, public health, education, credibility and morale) could be much, much higher. Corruption both undermines social stability (sparking tens of thousands of protests each year), and contributes to China"s environmental degradation, deterioration of social services, and the rising cost of health care, housing, and education. Besides corruption, inequality in both wages and wealth distribution plagues China. According to the CIA, China's Gini Coefficient, a measure of income inequality, was 48, (100 perfectly unequal, 0 perfectly equal) in 2009, ranking it 52nd of 136, and in 2010, the International Institute for Urban Development in Beijing calculated China's Gini Coefficient at 43.8. Zhu Yinghui, a researcher at the institute, said that China"s wealth gap raised concerns about China"s development path. "The income gap between urban and rural, between communities, and lack of middle class are factors that could affect social stability," she said. Separately, an academic survey of more than 8000 households across China conducted in 2011 suggests a much greater level of inequality, with the top 10% controlling 56% of income. "That makes China more unequal than the United States and even more unequal than African societies" said Gan Li, a Professor at China's South Western University of Finance and Economics and Texas A&M University in the U.S., who led the survey. That commences my argument. I await your response.