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Economic growth rejected by Greens good for China

Economic growth, rejected by Greens, is good for China.

By Jim Peron

Jeanette Fitzsimmons of the Green Party recently argued that economic growth is not important to Kiwis. She said that surveys show people are interested in quality of life issues like education and health care.

Presumably she wants more of each which means each will cost more. Without economic growth it would be difficult to have more of the more good things, whatever they may be.

Fitzsimmons is not keen on economic growth. Her party proposes policies that will reduce growth partially justified by their belief that growth is not what people want. True. People don¹t want growth‹at least not for it¹s own sake. They want growth for what it provides.

They want nicer homes, better health care, more leisure. They want to be able to afford decent cars and nice clothes. All these things require economic growth.

A large amount of what we see as ³quality of life² issues, are in fact, economic growth issues. No economy exists for it¹s own sake. We have economies because they produce the goods and services that people want and need.

Ms. Fitzsimmons lambasted growth by insinuating that economic growth requires harming people. She said: ³One of the countries with the fastest economic growth at present is China. Their growth is based on forced labour paying workers a dollar a day for 16 hours in appalling conditions. It is based on prison labour and environmental destruction and New Zealanders don¹t want a bar of it.²

This may be a strong indication that the Greens will oppose a free trade agreement with China.

Fitzsimmons¹ accusation is a strange one. I just got a copy of the World Development Indicators 2004 and the report investigates poverty rates around the world.

The Indicators also show what number of people in a nation live on $1 a day or less. From Fitzsimmons¹ hyperbole one gets the impression this number must be a massive one in China and growing. If the growth rate is based on forced labourers earning less than $1 a day, and the growth rate continues on, we would expect poverty in China to be falling.

Yet according to the WDI the number of Chinese living on $1 a day has declined substantially. In 1981 it was estimated that 606 million fell into this category. As China¹s markets globalised and were liberalised that number dropped. By 1990 it was down to 377 million and by 2001 it was down to 212 million.

As a percentage of the population the drop is relatively similar. In 1981 61 percent of all Chinese lived on less than $1 a day. By 2001 it had dropped to just over 16 percent.

China has the sixth largest economy in the world worth in excess of $1.2 trillion dollars per year. It¹s hard to believe, per Fitzsimmons¹ claim, that as large an economy as this is mainly driven by the16 percent of the people who earn a $1 per day. There are other indicators as well that the claim by the Green co-leader is inaccurate.

For instance life expectancy at birth is rising in China, increasing by four years since 1980‹which is not something you¹d expect if her claims were accurate. Child labour has declined dramatically in China over the last 20 years so that today it is lower then in nations like Brazil or Egypt.

At the same time access to education has increased. In the last 10 years the number percentage of appropriately aged young people receiving a tertiary education increased by more than 400 percent. At the same time the percentage of appropriately aged students receiving a secondary education increased from 49 to 68 percent.

Of course all this took place during a period when the Chinese population continued to grow. No one seems to dispute the massive improvements in the standard of living for the Chinese people. With such apparent progress it would appear that Fitzsimmons is wrong on two counts.

Firstly, if people were merely earning $1 a day and in the conditions she describes it¹s hard to see how living standards could have improved so much. People working in such conditions, at such wages, should have a diminished life expectancy not one that is fast approaching the life expectancy of the average Kiwi. For the average living standards to increase the bulk of the Chinese people must have seen improvements.

Secondly such improvements must indicate improved wages and living standards for most Chinese. It¹s possible to sustain a small percentage of a population off the efforts of the bulk of the people. It would be hard indeed to have this sort of improvement off the 16 percent of Chinese who still live on less than a $1 a day. If China¹s prosperity were such a fraud the numbers earning the wages described by Fitzsimmons should be growing not shrinking.

If her claims are an indication that the Greens will oppose a trade deal with China it should be noted that such a stand will hurt the poor more than anyone else. Globalisation and trade is good for poor people. Globalised developing nations have growth rates double those of New Zealand and studies indicate that there is a 1 to 1 ratio of benefits to the poor. When a developing nation, like China, has growth rates of around 8 percent the average poor person sees their income improve by 8 percent as well.

Jim Peron is the executive director of the Institute for Liberal Values.

Note to editors: The above contains data from the World Development Indicators 2004 from the World Bank. That material is embargoed until until 6 pm April 24th, New Zealand time.

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