In 1818 China was, in fact, the largest economy in the world and was in its third century of stable rule; the Industrial Revolution in Europe had started but not reached full effect. In 2018 China is now the world's second-largest economy (if measured in terms of PPP, it is the largest). By 2030 it is predicted that China, once again, will be the world's largest economy. Such profound developments are never smooth sailing, however. They come with major challenges: facilitating domestic consumption, lower savings, reducing debt levels, balanced rise in living standards, environmental concerns etc... these are all issues facing the so-called Fourth Industrial Revolution.
It has now been 40 years since economic reforms were initiated that opened up China to foreign investment and foreign technology. I wonder if the people who proposed such transformational policies to Deng Xiaoping at the time imagined what would become of it all 40 years on. At that time, China had a GDP that was lower than half the Asian average and lower than two-thirds of the African average. In dollar terms, the GDP has jumped from $149.54 billion in 1978 to $11.2 trillion in 2016. The economy has been growing nearly 10 percent each year on average for the last 40 years, which is triple the world's average. Such transformational growth has lifted millions of people out of poverty. The development is mainly driven by the coastal east, the east and west of China being strikingly different with divides in economics, local politics and culture. Per capita income there is still below the world average, reflecting the amount of development that needs to occur mainly in the western part of the country.
China's Gini coefficient in 1978 would have been very low, as can be inferred by the GDP and mode of governance, But today's Gini coefficient as a measure of the whole country shows that there is a polarization between the rich and the poor. There is a gap between the developed east and the underdeveloped west or remote frontier areas of the country. In terms of Gini coefficients, 0.4 is a kind of warning signal, and any higher than 0.4 and the society is expected to experience regional imbalance, rural and remote poverty, discrimination, hostility, crime and environmental degradation.
China's Gini coefficient is now 0.465, ranking 27th in the list of countries with the most inequality. The average Gini coefficient for the last 10 years in China has been about 0.482 which is approximately 67 percent higher than in Germany. The Gini average for Europe is about 0.305, and 0.351 for Asia. Some experts believe that if "gray" and "invisible" incomes were included in China's calculation of the Gini coefficient, it would be even higher still. The Hong Kong Special Administrative Region ranks ninth at 0.537. The Gini coefficient is a good snapshot of the state of income inequality in an economy as a whole, It does not, however, reflect the differences between the eastern and western parts of China – most of the real inequality is in the west of the country.
I arrived in China just after the beginning of the lunar year in 2007 for a one-year language and culture course at Zhejiang University and have spent the majority of time from then to now living in Hangzhou. In a quarter of the time since economic reforms were rolled out, I believe I have seen many historical and amazing events during the time I have been in Hangzhou. To make purchases in Hangzhou in 2007 my knowledge of localities and language skills were weak at that time I had to find out where to buy something I needed, how to get to that place, and once there, it took much time browsing before a purchase could be made. Haggling about the price was also expected at any place outside of large department stores. Back then smart phones were not widespread, and in any case, I did not have one, so unlike these days in Hangzhou I was not able to just use any online purchasing platforms. Now I usually use Taobao on my phone to make purchases and have my item arrive at my door sometimes as quick as next day. One of the great features of such platforms these days is that it is not just conventional goods such as clothes and books can be purchased, but also almost any conceivable product is available. I can, for instance, use such apps on my phone to purchase groceries online, pay all my bills, book services, transport or specialist medical appointments.
It is amazing to ponder that in most parts o f the world, even in many developed countries, such conveniences are still out of reach. However, in the early days of Taobao use, especially for foreigners, to make purchases one had to recharge one’s account with coupons bought at the post office, use online banking (which required a password dongle and you could only use IE on windows, since you could really only use Bank of China). These days, Taobao and Alipay are apps. Bank cards can be linked to one's Alipay account and mobile payments can hence be made easily. Hangzhou is now truly what I would call a 95 percent cashless city. Almost all vendors of products and services (in the recent couple of years many governments agencies such as traffic authorities and hospitals have also joined the mobile payment party) accept mobile payments. Just a few years ago, Alipay and WeChat mobile payments were not widely accepted, not even in Shanghai. I am very happy to have witnessed how Hangzhou has led the way in mobile payment use in China and, I dare say, the world.
Another fantastic feature of mobile payment is its coupling with public transport and QR barcodes. The recently added subway in Hangzhou and public buses accept mobile payment via a virtual QR code. This makes public transport use very convenient and user friendly.
The Alipay application is a mobile payment platform, but it is also a collection of smaller applications with special functions. For instance, I use Alipay for all mobile payments, transport, booking flights and long-distance train tickets, paying my bills, calling a taxi, paying traffic infringements etc... As a foreigner using Alipay, some of the features will not work for me as I do not have a national ID number in my digital profile stored on the Alipay server.
One day I was out and wanted to take a bus. I had checked on my map app and the bus was indeed the most convenient way to travel. At that time, I was using the subways with a digital pass but wanted to try the bus. I arrived at the bus stop and the bus was there so I jumped on and thought I will just set the digital bus pass up on the bus and scan it once set up. To my embarrassment, I was not able to set it up successfully, I rummaged through my bag for some coins but had no cash on me. Luckily, a nice lady saw what was going on and gave me a few coins for the bus fare. I thanked her and explained what I was doing and offered to transfer her the fare, she said "don't worry about it". After I finished the meeting, I sent a WeChat friends moment about my bus trip and tagged several people that worked at Alipay (Ant Financial). A message was left on my post that they would look into it, and within less than a week, sure enough, I had a digital bus pass.
I go back to Australia once or twice a year, and every time I am lining up to make a purchase I reach for my phone instead of my wallet. Although Hangzhou, with its very good public transport system and excess of shared bicycles, is great, some days I nevertheless need to make use of a car. I was very proud at the beginning of 2012 when I worked out how to transfer my Australian driver’s license to a Chinese license and passed the Chinese language computer based 100 MCQ road rules test on my first attempt. When I first started driving, I noticed that many drivers were disregarding road rules, safety and consideration for other people. The driving culture these days is much better than it was, say, five years ago. One main reason for the improvement is the surveillance cameras and new road rules in place. Paying a fine for breaking the rules is not the main factor motivating better behavior on the road; rather it is the point system that really raises awareness among motorists. One interesting road rule that is now being enforced in Hangzhou is that cars are to stop to let pedestrians across the road at pedestrian crossings. As a motorist If you do not stop, you fear a fine and a deduction of points. Smart cameras at crossings are monitoring behavior. Since the roll-out of all these smart cameras for detecting every conceivable infringement, driver behavior has improved greatly in Hangzhou.
More cars are made in China than any other country and while more gas-guzzling SUVs are being sold in China, the production of hybrid and electric cars and new energy vehicles is also on the rise. The government is promoting their use by giving subsidies to consumers, such as cashback discounts and reduced number plate registration fees. Number plate registration fees for new energy vehicles is free in Hangzhou, whereas for internal combustion engine vehicles, the fee is 40,000 yuan. The government has forced restrictions on car manufacturers to up their production and promotion of new energy vehicles. The manufacturers seem willing to bear the cost only because the car market is so large and becoming larger. Hangzhou has had hourly rentable electric cars since 2013. I cannot think of any other place in the world where I have seen more new energy vehicles than in Hangzhou.
Although from my experience living in the east of China has many pluses, there are still many soft-type social problems that need to be addressed and improved in areas of personal information protection, protection of children and gender inequality, and I think these problems will be addressed and fixed by the younger generation, a generation that has experienced prosperous economic times, better education, internet, and unprecedented openness. I believe the next 10 years will be even more exciting and yield greater achievements.
Tim Clancy is from Australia and has lived in Hangzhou, China, for 8 years. He is a bilingual moderator and also founded a business in Hangzhou. He was the official international volunteer representative of the 2016 G20 Hangzhou Summit, and also an Advanced Individual in the G20 Summit.
This article is selected from a book, The Sleeping Giant Awakes, jointly published by China Daily’s communication-led think tank China Watch and Guangdong People's Publishing House.
The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
Tim Clancy
In 1818 China was, in fact, the largest economy in the world and was in its third century of stable rule; the Industrial Revolution in Europe had started but not reached full effect. In 2018 China is now the world's second-largest economy (if measured in terms of PPP, it is the largest). By 2030 it is predicted that China, once again, will be the world's largest economy. Such profound developments are never smooth sailing, however. They come with major challenges: facilitating domestic consumption, lower savings, reducing debt levels, balanced rise in living standards, environmental concerns etc... these are all issues facing the so-called Fourth Industrial Revolution.
It has now been 40 years since economic reforms were initiated that opened up China to foreign investment and foreign technology. I wonder if the people who proposed such transformational policies to Deng Xiaoping at the time imagined what would become of it all 40 years on. At that time, China had a GDP that was lower than half the Asian average and lower than two-thirds of the African average. In dollar terms, the GDP has jumped from $149.54 billion in 1978 to $11.2 trillion in 2016. The economy has been growing nearly 10 percent each year on average for the last 40 years, which is triple the world's average. Such transformational growth has lifted millions of people out of poverty. The development is mainly driven by the coastal east, the east and west of China being strikingly different with divides in economics, local politics and culture. Per capita income there is still below the world average, reflecting the amount of development that needs to occur mainly in the western part of the country.
China's Gini coefficient in 1978 would have been very low, as can be inferred by the GDP and mode of governance, But today's Gini coefficient as a measure of the whole country shows that there is a polarization between the rich and the poor. There is a gap between the developed east and the underdeveloped west or remote frontier areas of the country. In terms of Gini coefficients, 0.4 is a kind of warning signal, and any higher than 0.4 and the society is expected to experience regional imbalance, rural and remote poverty, discrimination, hostility, crime and environmental degradation.
China's Gini coefficient is now 0.465, ranking 27th in the list of countries with the most inequality. The average Gini coefficient for the last 10 years in China has been about 0.482 which is approximately 67 percent higher than in Germany. The Gini average for Europe is about 0.305, and 0.351 for Asia. Some experts believe that if "gray" and "invisible" incomes were included in China's calculation of the Gini coefficient, it would be even higher still. The Hong Kong Special Administrative Region ranks ninth at 0.537. The Gini coefficient is a good snapshot of the state of income inequality in an economy as a whole, It does not, however, reflect the differences between the eastern and western parts of China – most of the real inequality is in the west of the country.
I arrived in China just after the beginning of the lunar year in 2007 for a one-year language and culture course at Zhejiang University and have spent the majority of time from then to now living in Hangzhou. In a quarter of the time since economic reforms were rolled out, I believe I have seen many historical and amazing events during the time I have been in Hangzhou. To make purchases in Hangzhou in 2007 my knowledge of localities and language skills were weak at that time I had to find out where to buy something I needed, how to get to that place, and once there, it took much time browsing before a purchase could be made. Haggling about the price was also expected at any place outside of large department stores. Back then smart phones were not widespread, and in any case, I did not have one, so unlike these days in Hangzhou I was not able to just use any online purchasing platforms. Now I usually use Taobao on my phone to make purchases and have my item arrive at my door sometimes as quick as next day. One of the great features of such platforms these days is that it is not just conventional goods such as clothes and books can be purchased, but also almost any conceivable product is available. I can, for instance, use such apps on my phone to purchase groceries online, pay all my bills, book services, transport or specialist medical appointments.
It is amazing to ponder that in most parts o f the world, even in many developed countries, such conveniences are still out of reach. However, in the early days of Taobao use, especially for foreigners, to make purchases one had to recharge one’s account with coupons bought at the post office, use online banking (which required a password dongle and you could only use IE on windows, since you could really only use Bank of China). These days, Taobao and Alipay are apps. Bank cards can be linked to one's Alipay account and mobile payments can hence be made easily. Hangzhou is now truly what I would call a 95 percent cashless city. Almost all vendors of products and services (in the recent couple of years many governments agencies such as traffic authorities and hospitals have also joined the mobile payment party) accept mobile payments. Just a few years ago, Alipay and WeChat mobile payments were not widely accepted, not even in Shanghai. I am very happy to have witnessed how Hangzhou has led the way in mobile payment use in China and, I dare say, the world.
Another fantastic feature of mobile payment is its coupling with public transport and QR barcodes. The recently added subway in Hangzhou and public buses accept mobile payment via a virtual QR code. This makes public transport use very convenient and user friendly.
The Alipay application is a mobile payment platform, but it is also a collection of smaller applications with special functions. For instance, I use Alipay for all mobile payments, transport, booking flights and long-distance train tickets, paying my bills, calling a taxi, paying traffic infringements etc... As a foreigner using Alipay, some of the features will not work for me as I do not have a national ID number in my digital profile stored on the Alipay server.
One day I was out and wanted to take a bus. I had checked on my map app and the bus was indeed the most convenient way to travel. At that time, I was using the subways with a digital pass but wanted to try the bus. I arrived at the bus stop and the bus was there so I jumped on and thought I will just set the digital bus pass up on the bus and scan it once set up. To my embarrassment, I was not able to set it up successfully, I rummaged through my bag for some coins but had no cash on me. Luckily, a nice lady saw what was going on and gave me a few coins for the bus fare. I thanked her and explained what I was doing and offered to transfer her the fare, she said "don't worry about it". After I finished the meeting, I sent a WeChat friends moment about my bus trip and tagged several people that worked at Alipay (Ant Financial). A message was left on my post that they would look into it, and within less than a week, sure enough, I had a digital bus pass.
I go back to Australia once or twice a year, and every time I am lining up to make a purchase I reach for my phone instead of my wallet. Although Hangzhou, with its very good public transport system and excess of shared bicycles, is great, some days I nevertheless need to make use of a car. I was very proud at the beginning of 2012 when I worked out how to transfer my Australian driver’s license to a Chinese license and passed the Chinese language computer based 100 MCQ road rules test on my first attempt. When I first started driving, I noticed that many drivers were disregarding road rules, safety and consideration for other people. The driving culture these days is much better than it was, say, five years ago. One main reason for the improvement is the surveillance cameras and new road rules in place. Paying a fine for breaking the rules is not the main factor motivating better behavior on the road; rather it is the point system that really raises awareness among motorists. One interesting road rule that is now being enforced in Hangzhou is that cars are to stop to let pedestrians across the road at pedestrian crossings. As a motorist If you do not stop, you fear a fine and a deduction of points. Smart cameras at crossings are monitoring behavior. Since the roll-out of all these smart cameras for detecting every conceivable infringement, driver behavior has improved greatly in Hangzhou.
More cars are made in China than any other country and while more gas-guzzling SUVs are being sold in China, the production of hybrid and electric cars and new energy vehicles is also on the rise. The government is promoting their use by giving subsidies to consumers, such as cashback discounts and reduced number plate registration fees. Number plate registration fees for new energy vehicles is free in Hangzhou, whereas for internal combustion engine vehicles, the fee is 40,000 yuan. The government has forced restrictions on car manufacturers to up their production and promotion of new energy vehicles. The manufacturers seem willing to bear the cost only because the car market is so large and becoming larger. Hangzhou has had hourly rentable electric cars since 2013. I cannot think of any other place in the world where I have seen more new energy vehicles than in Hangzhou.
Although from my experience living in the east of China has many pluses, there are still many soft-type social problems that need to be addressed and improved in areas of personal information protection, protection of children and gender inequality, and I think these problems will be addressed and fixed by the younger generation, a generation that has experienced prosperous economic times, better education, internet, and unprecedented openness. I believe the next 10 years will be even more exciting and yield greater achievements.
Tim Clancy is from Australia and has lived in Hangzhou, China, for 8 years. He is a bilingual moderator and also founded a business in Hangzhou. He was the official international volunteer representative of the 2016 G20 Hangzhou Summit, and also an Advanced Individual in the G20 Summit.
This article is selected from a book, The Sleeping Giant Awakes, jointly published by China Daily’s communication-led think tank China Watch and Guangdong People's Publishing House.
The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
