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CHINA: THE GIANT AWAKENS : Ancient Power Steps Into Asian Spotlight

June 15, 1993|DAVID HOLLEY | TIMES STAFF WRITER

BEIJING — A legacy of grinding poverty left by centuries of stagnation, chaos and isolation is finally fading. An increasingly self-confident nation now seeks a place in the world worthy of a country that is home to more than one-fifth of humankind.

"There lies a sleeping giant," Napoleon once said of this ancient land. "Let her sleep, for when she wakes she will shake the world."

For better or worse, China is awakening.

Tens of millions of peasants have left the land for factory and construction jobs, powering a transformation of China's coastal provinces and major urban centers. Linked with foreign capital and skills, their low-wage labor makes China a major force in world trade.

China's spectacular economic growth already exerts profound effects in all East Asia and the entire Pacific Rim. And in the overpopulated countryside of this country's vast interior are hundreds of millions more would-be factory hands who, if properly employed, can keep the boom going for decades.

In recognition that China has grown to be of immense importance not only geopolitically but economically as well, the International Monetary Fund last month revised its method of measuring the size of national economies and decided that China already has the third-largest economy in the world--valued at $1.7 trillion in terms of equivalent purchasing power.

By some calculations, China's could be the largest economy in the world in as little as three decades. Output has grown at an average annual rate of 8.4% in the past seven years. It spurted 12.8% last year and is set to jump another 10% or so this year.

China's economic expansion is likely to have considerable staying power, for it is based on unlocking the talents and energies of a people who had been enervated by the old system of state controls. Material incentives, labor mobility and rational prices are still rather new to China, and the full effect of their gradual implementation has yet to unfold.

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A flood of reasonably well-made consumer products already flows off assembly lines at modern, foreign joint ventures, at rural township enterprises and at large state-owned factories newly responsible for their own profits and losses. Small luxury services like pleasant sidewalk cafes or street-side car-washing are beginning to sprout in major cities. Shiny new department stores are stuffed with goods, while markets overflow with fruits and vegetables. Hundreds of high-rise office and apartment buildings have sprouted in Beijing and other major cities.

"If China continues to develop the way it is now, its role in the world economy will become stronger and stronger," noted Jiang Zhongxiao, a Stanford University-trained economist at the Chinese Academy of Social Sciences in Beijing. China's influence will mainly be felt through its fast-expanding trade, Jiang predicted.

Yet the rapidly modernizing parts of China are home to, at most, 400 million out of the country's nearly 1.2 billion people. China is on the road to becoming two nations, politically united but economically divided, with roughly one-third of its people in prosperous coastal and urban areas and two-thirds in isolated villages and towns of the interior. Life may continue to gradually improve even in the poorer areas, but only the modern third will have real weight in the world.

Some of China's neighbors--and strategists in Washington as well--worry whether its growing economic strength will lead to a new political and military assertiveness. Beijing's claim to sovereignty over both Taiwan and the South China Sea adds urgency to these concerns.

The governments of other Pacific Rim nations realize that something incredibly important is unfolding here. But where will it lead? Do old policies toward China need to be reassessed? China's awakening inspires both excitement over new opportunities and fears of what the future could hold.

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A new openness here allows powerful outside influences--including many from America--to come flooding in, undermining old ways. Everything from blue jeans and running shoes to the Goddess of Democracy statue erected on Tian An Men Square in 1989 reflects the subversive allure of American culture and ideas.

Most observers in Asia believe that as the old Communist system fades away or collapses, it is likely to be replaced not by Western-style democracy but by something closer to the authoritarian structures that brought the early phases of modernization to Taiwan and South Korea. Yet China's huge size and unusual history ensure that its path will be unique.

China's attempt to reform communism is a journey into uncharted seas. Its leaders have made it abundantly clear that they intend to preserve an unchallengeable Communist Party dictatorship, even as they pull back from trying to dominate every detail of economic and social life.

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