FOR a major part of recorded human history, China has had the world’s largest economy. According to economic historians, China accounted for an estimated 32 per cent of the world’s GDP in 1450, after which it went into a slow decline. Europe was still undeveloped and poor, and after it was energized by the Renaissance, its explorers went looking for India, fabled home of wealth and affluence. Under the Mughals, its prosperity reached new heights and in the 16th and 17th centuries, it was responsible for around 30 per cent of the world’s GDP.

The European powers entered into competition in trying to open up these ancient lands to commerce — and to imperial subjugation — on the strength of new technologies evolved through the Industrial Revolution. The subcontinent was conquered by the British, while China was exploited by almost all the industrialized countries, including Japan. By the start of the 20th century, both regions had reached the lowest point in their political and economic subjugation. South Asia developed along capitalist lines under the British tutelage, while China had a more chequered evolution, so that it emerged as a communist state in 1949, two years after Pakistan and India became independent.

Since its revolution, China has gone through several economic phases, with the first decade devoted to following the Soviet model, though Mao’s launching of the “Great Leap Forward” in 1958 ended in disaster, compounded by natural calamities. Seven years of pragmatism saw recovery and progress but then Mao Zedong again experimented with the Cultural Revolution starting in 1966, sending all Chinese intellectuals and managers to the countryside to learn from the peasants.

As Deng Xiaoping, who assumed leadership after Mao’s death in 1976, stated, this period saw negative growth, with the country going backwards rather than forward. Deng found the formula, combining economic reforms with political conservatism that has truly launched the country on the road to progress and development. In the quarter century since 1977, China has maintained a remarkable and consistent growth rate of 8 to 9 per cent per year that has made the country the fastest growing in the world in economic terms in recent times.

The ruling Communist Party has adopted a realistic approach to both its political and economic agenda. Politically, the leading role of the party has been maintained, but with provision to transfer leadership to younger and well-educated leaders. A fourth generation of leaders is in the process of taking over from President Jiang Zemin, and Prime Minister Zhu Rongji, who have held power for a decade (two terms of five years each) following the rule of Deng Xiaoping and Li Peng.

Hu Jintao has already assumed the party leadership, and will take over the presidency in March this year. China has avoided the disturbing effects of political infighting, and ensured the continuity of economic reforms started in 1977.Perhaps the most significant result of the smooth transfer of power since 1977 has been that the high rate of economic growth has been maintained.

The quarter century of economic reforms and expansion has not been without some distortions and inequalities. The most outstanding successes in economic development have been chalked up along the coast, where foreign investment and technological transfers have had the greatest impact. The annual per capita income in Shanghai and Shenzen is approaching $5,000, whereas it is below $500 in much of rural China, and even below $300 in the most remote parts of western China.

More seriously, the modernization of industry has been held back on account of the need to sustain the large public sector that still employs millions of Chinese workers. To maintain the tempo of growth, inefficient industries must be allowed to die their national death and the manpower thus released absorbed in modern enterprises and public works projects.

The continued involvement of the state in the gigantic public and private sectors of the economy has produced a whole range of anomalies and risks. The fiscal deficit has grown, as the state invests heavily not only in the expanding sectors of the economy, but also to absorb the losses of the state owned enterprises (SOEs). The total debt of the state has grown to $1.6 trillion, The banks are bulging with deposits on account of the Chinese habit of saving, but a high percentage of the loans are non-performing. The amount of recoverable debt is approaching $500 billion, and economists worry about the risk of failure of many state-owned banks.

Yet it is imperative that the high rate of investment is maintained and massive unemployment avoided, failing which the standing of the ruling party will be undermined. Some analysts in the West, including expatriate Chinese economists, have even started to write about the imminent collapse of China. These prophets of doom perhaps indulge in wishful thinking when they speculate that this collapse may coincide with the on-going transfer of leadership to the fourth generation.

More recent surveys show that China has successfully adopted strategies that would not only maintain the tempo of growth, but also provide employment to the bulk of its population despite the inevitable decline of the inefficient state sector. Chinese policymakers have learnt from the lessons of other countries that had to stimulate the economy and to create employment opportunities. Just as President Roosevelt had to launch a massive programme of public works under the New Deal, the Chinese leadership has launched a series of big projects that serve to provide the infrastructure for future development and also keep the economy growing.

Another factor that has shaped the Chinese economic strategy is that many of the leaders are engineers and scientists who are ready to invest in large projects, with long gestation periods. Many of the huge projects were undertaken to make sure the country did not suffer from the slow-down that affected East Asia in 1997-98. That was the year when, instead of cutting down, China chose to monopolize the country’s vast private savings for a building boom, which, in the words of The New York Times of January 14, 2003,”dwarfs the New Deal and the Marshall Plan”.

America’s premier newspaper, which was sceptical about China’s ability to correct internal distortions and to manage the financial challenges involved in achieving ambitious targets, has been impressed by the manner in which China has gone for growth and stability. The government, state banks and foreign and domestic companies spent $200 billion in the first eleven months of 2002 on basic infrastructure projects, which represents 15 per cent of China’s gross domestic product.

The Three Gorges Dam, on the Yangtze River, was considered to be the world’s most ambitious and expensive water and power project, with an estimated cost of $30 billion. It will be dwarfed by the latest engineering colossus, that will divert 48 billion cubic meters of water annually from the Yangtze River to the Yellow River in the north, to contain desertification and drought at a cost of $60 billion.

China has more than its share of difficult terrain, with 90 per cent of its territory covered by mountains and deserts. However, the disparities emerging between the developed east and the backward west must be overcome in order to avoid the threat of disintegration and to eliminate poverty that affects scattered communities all over China. No barriers are too formidable for China’s planners, engineers and workers. An 1,100 km railroad is being built between Qinghai and Tibet, with workers carrying oxygen kits to build it at altitudes up to 16,000 feet above the sea level.

Chongqing, the largest metropolitan area in the Chinese heartland in Western China with 30 million inhabitants, is being transformed through the construction of 1,000 kilometres of superhighways, four new railway lines, an urban light rail system and a new airport that will cost $200 billion over the next ten years. This is more than what the US spent on the American inter-state highway system in the 1950s. Chongqing is situated in a difficult location in the Zhongliang mountains pierced by flood-prone rivers, but is slated to become the hub of the vast underdeveloped region in the west.

The Great Western development plan adopted by the government at the close of the 20th century envisages a crash programme that will not only narrow the economic disparity between the East and the West, but also provide links with remote countries in Central Asia as well as Afghanistan and Pakistan. An amount of $90 billion was earmarked for this region in the initial phase. The close Chinese cooperation being extended for developing ports in Myanmar and Pakistan will eventually provide shorter outlets to the Indian Ocean to assist development in southern and western China.

The developed regions, and the major cities in particular, are not standing still either. Shanghai’s spectacular development has become the model and pace-setter for modernization and development. Leaders who guided and planned its growth, such as President Jiang Zemin, rose to the top, and even now, the executive vice mayor of Chongqing, Huang Qifan, was a former top official in Shanghai. He conceded that the investment plans for the city sounded over-ambitious, but stated that when the plans have been implemented, they will make sense through the results achieved.

For a leadership committed to developing socialism with Chinese characteristics, the current economic strategy counts on foreign technology and investment that would promote higher productivity in a huge labour force that is shifting from agriculture to industry. This also requires an environment of peace and stability in the country and the world. Given the desired political and economic indicators, China may once again emerge with the largest single economy in the world. There are valuable lessons to learn from the Chinese experience, notably by the developing countries.

FOOD security is fast emerging as a major challenge for third world countries and that includes Pakistan. It was not sheer coincidence that two meetings held on the same day but more than a thousand miles apart last week focused on identical issues and shed light on some stark realities.

In Karachi, Shirkat Gah held a conference on food security and economic sovereignty to create awareness about the problems which loom large and also offer some solutions. The same day in Islamabad, the Mahbubul Haq Human Development Centre launched its annual Human Development in South Asia report for 2002 focusing on agriculture and rural development.

It is now clear that for agricultural societies like ours it is not just the quantum of food produced that determines the level of progress and development. The more important aspect of the matter is how this food is distributed so that no one remains hungry. There is also the basic need for equitable distribution of wealth generated by the food sector. The fact of the matter is that all the progress made in food production notwithstanding, the quality of life of the common people has not improved visibly. In some ways there has been an actual deterioration. What is more disquieting is that worse is in store.

Food, which is a basic necessity, impacts on the life of people in three ways. First, it must be accessible to all in sufficient quantities and at affordable prices to ensure that there is no starvation and under-nourishment. Thus, there may be no shortage of food at all but it may not reach the hungry because it is too costly and beyond their means to buy.

Secondly, there is the direct link between food and health. This is determined by the availability of various items of food as well as general awareness and education among the people about nutrition and nourishment.

Thirdly, there is the wider and basic issue of who controls food production and to what end. It is important that all three of these issues must be addressed concurrently if we want to ensure food security for the country.

The statistics for food production in Pakistan broadly present a rosy picture. Although the population has grown phenomenally — from 32 million in 1947 to 150 million today — food production has grown even faster. Thus, in 1950, cereal production was 139.3 kg per capita when in 2002 it rose to 149.3 kg. The number of calories per capita per day also went up from 2,078 to 2,306 in the same period.

Why should we then worry? The problem is that these figures represent a broad average at the macro level. They hardly mean that each and every person is actually receiving the amount which the tables show. Had that been the case, 26 per cent of under-five children would not have been underweight or 20 per cent of the population under-nourished. Had the growth in the agricultural sector been so equitably distributed, why would 33 per cent of the people of Pakistan be living below the poverty line? Why would rural-urban migration have assumed the form of a flood from a trickle that it was several decades earlier?

There is also the change in the pattern of food production that has affected the people. Study the figures of under-nourished adults and children against the backdrop of the pattern of our food production and you have a clear picture of why the health status of our people is falling and the so-called lifestyle diseases such as cardiovascular disorders, diabetes, etc., are on the rise. While the availability of other food has increased tremendously, the production of pulses — a rich source of protein — has been halved from 13.9 kg per capita in 1950 to 6.1 in 2002.

Significantly, edible oil (much of which uses saturated fat as its base) jumped up from 2.3 litres per capita in 1950 to 11.3 litres in 2002. A survey by a group of nutritional experts confirms the change in the dietary habits of the people. One can well say that food production has been determined by demand. But is it not strange that the more expensive items of diet, such as eggs, meat and sugar, are the ones which have registered an enormous rise in production.

As for the factor of control over land, which is the key element in agriculture, Pakistan is known to have a skewed system under which a handful of big landlords own vast acres of land — seven per cent of landlords own 40 per cent of the cropped area. Why land reforms could never be implemented effectively and how the landowning feudal class has wielded political power to perpetuate its own grip over the government is an old story well known to everyone in Pakistan.

But the feudal land tenure system will appear to be benign when we look at the direction our agricultural policy is now taking. In March 2001, the Musharraf government approved a corporatization of agriculture package and paved the way for the induction of multinationals in the food sector. Under the new policy, foreign investors will be leased out state land without any ceiling on it and provided incentives such as loan facilities, tax concessions, exemption from labour laws, and so on.

The government proclaims that its objective is to enhance food production, attract foreign investment and boost exports. That sounds attractive, but one should also ask at what cost? The corporatization of agriculture will work against the interests of the small farmers. To estimate the number of people/families to be affected, one has to recall that agriculture generates 44 per cent of jobs in Pakistan.

Already, 36 million acres are said to have been reserved for this scheme. Given the fact that the population in the rural areas is more impoverished and disadvantaged, the induction of big corporations can be expected to lead to further concentration of resources and power in the hands of a few. Will the small farmers ever be able to compete with the mammoth transnational corporations? The haris and peasants could not hold their own before the big feudals. The situation will be worse for them now.

In effect, corporate farmers with their wealth and power will drive out the small farmer from this area of national life. Not only will millions be deprived of their livelihood — like the 800,000 of their compatriots who lost their jobs in the era of the Green Revolution — the repercussions will be more profound and widespread this time. Monopolies will be created in the agricultural sector which will join hands with the fertilizer companies and seed corporations to seize control of the food market in due course. By manipulating supply and demand, they will jack up the prices, and since they will be operating at the international level, their power will be invincible.

Undoubtedly this is an offshoot of the globalization process. But to barter away our food security for foreign investment and modern technology will amount to committing collective suicide. At this stage when the process has not actually begun there is still time for the government to stop and rethink its policy. No doubt there is a lot, which can be done to boost agriculture and food production while concurrently improving the lot of the small farmer.

Though many may think otherwise, the time for land reforms is not over. Quoting the report of a UN conference in Maastricht in 2001, an activist of Shirkat Gah states that small farms are still found to be much more productive than big farms. There was a time when farmers’ cooperatives were believed to be the answer to the constraints small farmers faced in increasing the yield of their farm. Rather than going in for cooperatives, the government is opting for corporatization. That will not help.