Implications of Chinese reforms

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Implications of Chinese reforms

If you drive one or two minutes from the JoongAng Ilbo’s Beijing bureau, you can find a typical residential area from the socialist era. Just head to the working-class residential neighborhood of Jiuxianqiao. The two-lane streets are lined with 60-year-old trees, suggesting the history of the town. The simple five-story apartment buildings are well maintained and evoke nostalgia. A Chinese cameraman for JTBC said that it felt as if he were travelling back in time to the ’80s. Because many streets are too narrow for cars to navigate, bicycles are the main mode of transportation here. People seem more laid-back than those in downtown Beijing, and it seems as if time is ticking more slowly here. Lately, mixed-use high-rises have begun to surround the district. The redevelopment craze is erasing the trace of socialism.

Lee Dong-im of Force Gallery in the 798 Art District has been working in Beijing for nearly 20 years and says when he first came to Beijing in the ’80s, people seemed comfortable and happy. They were waiting in lines for hours to get rations, holding tickets for cooking oil, rice and pork. But it was a homogenous society where people were not compared to others. The generous faces of the Chinese people made the foreign country a welcoming place. I agreed with him. When I came to Beijing for training in 1994, I was reminded of Korea in the ’70s.

But after three decades of reform and economic opening, skyrocketing real estate prices and the gap between the rich and the poor are shocking. It is no longer possible to find the laid-back, comfortable faces. The income inequality is similar to the time of the Taiping Rebellion during the late Qing Dynasty.

The rapid growth of the last two centuries ignited a business boom in China. Those with keen eyes for money-making opportunities and connections become vastly rich. People were not familiar with the system at first, but they caught on and became envious of the wealthy. The social security network of medical care and retirement programs, which used to be managed by the state, rapidly dissolved.

Now the burden is on the companies. The government emphasizes corporate social responsibility and urges foreign investors to spend more money. But the hole in the welfare system cannot be filled by pressuring private businesses. The 145,000 state-owned companies need to be tackled first. They monopolize various benefits, such as loan privileges, tax benefits and policy assistance, and distort resource distribution. If the reform transforms the market into a business-friendly system, we can expect a cycle of welfare through employment. The operation on the state-run companies will also be a good sign for the Korean economy. That’s why we have to pay attention to Xi Jinping’s reform.

* The author is a Beijing correspondent of the JoongAng Ilbo.

by Cheong Yong-hwan

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