Chinese President Hu Jintao presides over a country still shrouded in mystery as far as the outside world is concerned. Poverty resides side-by-side with extreme wealth, the downtrodden with extremely powerful party bosses, and multinational businesses with mom-and-pop vendors, artisans, and factory laborers. You can find enough to both celebrate and mourn in China.
The country's economy, for instance, roared to a 10.5 percent expansion in 2010 and is projected to do even better this year — hence efforts to stem inflation and curb over-enthusiastic business lending by financial institutions. Yes, that's correct. While politicians and small business owners in the US and Europe are begging banks to start lending again, China is instead tightening lending requirements and repeatedly raising borrowing rates and bank capital reserves. Reports indicate bank lending in China soared to between $146 billion and $220 billion in January alone.
The total of new loans in 2010 was estimated to be approximately $1 trillion, down from $1.4 trillion in 2009. The double-digit economic expansion China rang up in 2010 built on top of the sizzling 9.2 percent growth from 2009. (Click here for additional information on China's GDP. Also see China: Lending Restrictions and Beijing’s Predicament for information on how China's surging growth is becoming a problem for the country's economic regulators.)
That China is in an enviable position in the comity of nations is not in doubt. The country's external debt as a percentage of gross national income (GNI) is 8.7 percent, according to the World Bank, which interestingly does not offer similar data for the major developed nations, including France, the UK, the US, and Japan. I am still trying to find out why this information is not available for these countries.
Also, China is now the world's second-largest economy and its growth trajectory could push it pass the US to make it the No. 1 global economic power in two to three decades, according to some estimate. By the way, countries with high national debt and falling assets prefer to cite gross domestic product (GDP) rather than GNI, because the comparisons are more favorable.
As President Hu wraps up his days-long visit to the US, it's important to focus not just on how far China has come in improving its national fortune and opportunities for its citizens, local businesses, and the world, but also ponder how far it can still go. Obviously, China can still do better on a wide range of subjects and issues, including its human rights record and improving and opening up the political system to full citizen participation.
On the economic front, China's rise to the No. 2 position offers both opportunities and challenges. How China tends its economic growth will affect, not just the country and its citizens, but also the entire globe. What this means is that Hu and other Chinese leaders would have to pay even closer attention to the country's obligations to trading partners, other countries, and general citizens of the world.
China has received much from everyone, including the international community that poured billions in investment into the country and helped lift its economy from the depths of poverty, but also from its own citizens who similarly poured their sweat into making this a better country than it was a mere 20 years ago.
High-tech companies played and are playing a major role in China's development. The industry supply chain is now anchored in China, and whatever happens to the country will help or hurt high-tech firms globally. That's why we cannot afford to stay silent on how China evolves.
Already, we are seeing tantalizing glimpses of what China can become, but we've also seen its government in less flattering light, in how citizens were on occasion poorly treated and businesses — local and international — sometimes inadequately represented or supported with the legal framework and other infrastructure they need to be their best.
China can overcome all these teething problems as its global status improves. In my opinion, the country's finest hour is ahead, but first, the leaders must steer it successfully through a terrain filled with difficult social, political, and economic challenges. Countries that helped China develop its economy must insist the country fulfill its obligations, not just to itself and its citizens, but also to the entire world.