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Page last updated at 17:04 GMT, Wednesday, 6 May 2009 18:04 UK

Is China a rich or poor country?

Shanghai skyline (left - copyright AP) and people walking past a homeless person (right)
Rich and poor live side-by-side in Shanghai

By Chris Hogg
BBC News, Shanghai

The year 2009 could turn out to be a good one for China.

Recent economic data prompted some analysts to suggest it might already have reached the bottom of the current economic cycle. Many are expecting a recovery in the second half of the year.

If China's economy starts to recover earlier than those in other countries, it could challenge the assumptions we make about the world economic order.

Chinese companies, which are more cash rich than big corporations in some other countries, and with financial support from the government, have been scouring the globe for resources for some time now.

Andy Tsieh
China's not a normal country - it's a huge empire, it's like the first world, the second world and the third world co-exist together
Andy Tsieh, "independent" economist

The global economic turmoil has offered them new opportunities to pick up under-valued assets elsewhere.

And yet this is a country that still receives hundreds of millions of dollars in aid from Western countries.

How should it be treated by the rest of the world then, as a "rich" country or a "poor" country, as one that needs to be helped or one whose economic strength we should fear?

Huge contrasts

From the top of Shanghai's tallest building, the World Financial Centre, tourists - most of them Chinese - gaze down on the city below them.

Rapid development in the past few years has created a skyline to rival that of Hong Kong's, New York's or Tokyo's.

Viewed from this height, Shanghai seems to be a rich, sophisticated, modern metropolis - and to a certain extent it is.

But at the foot of the tower it's a different story. You notice the pollution and the noise, the dirt and the traffic congestion.

Li Wei, an economist from Standard Chartered Bank in Shanghai
If you live in the west or the centre of China, then you don't really see why the global community is demanding so much from us
Li Wei, Standard Chartered Bank

Close up, Chinese cities are not always so pleasant. This country is in a hurry to remake itself, and laws to control construction and development are sometimes not well enforced here.

Watching this rapid change, it's hard to judge how far this country has come.

Andy Tsieh, who describes himself as an "independent" economist, argues that China is no longer a poor country.

"In terms of trade, China is the largest trading nation in the world today," he points out.

"In terms of gross domestic product (GDP), China is likely to surpass Japan as the number two world economy either this year or next year."

But he accepts that China's size complicates matters, making it harder to judge how to deal fairly with the Chinese.

"China's not a normal country - it's a huge empire. It's like the first world, the second world and the third world co-exist together inside China.

"China is many things at the same time."

Endemic poverty

In big cities like Shanghai, first world China and third world China don't just co-exist, they collide.

At the foot of the World Financial Centre a woman kneels on the pavement begging, a hat in front of her, her forehead on the floor. She's ignored by most of the passers-by in their business suits.

Officials in China agonise over how to deal with poorer "out-of-towners" who come to cities like this looking for work, or just a better life. They cannot afford to help everyone.

Li Wei, an economist from Standard Chartered Bank in Shanghai, says that even though the country is getting richer, there are hundreds of millions who really struggle to get by.

The burden of caring for them is sometimes ignored by economists or politicians from overseas, when they ask China to pay more to support bodies such as the International Monetary Fund.

Chinese shanty town
Despite China's growth millions of its citizens still live in poverty

"If you live in the west or the centre of China, then you don't really see why the global community is demanding so much from us," he says.

"To them this may not even be a question. Their mind is on how to make a living every day, not how to help the world."

There are other reasons, too, why China might not be able to contribute more on the world stage, according to Prof Shen Dingli from Shanghai's Fudan University.

He argues that, even as the country has gained more wealth, it has lost a lot in other ways.

"We have amassed a huge amount of money, but we've caused a huge amount of ecological damage," he says.

"We have not had balanced, sustainable development, so I would conclude that China is still a poor country environmentally, ecologically and philosophically."

Challenge and opportunity

The World Bank groups China among lower to middle income countries like Bolivia, India and Syria.

At the moment though, China's economy is in much better shape than those of many Western countries which fear China's biggest corporations are now in a stronger position than ever before to take control of valuable assets, like mines, or other strategic assets, because the companies that own them are desperate for cash.

Chinese President Hu Jintao said recently that "challenge and opportunity always come together".

As we in the West fall more into debt, and our economies become weaker than they were before, questions about whether China is a behemoth that should be tamed, or a developing country that still needs our help, become less abstract and more pressing.

Judging what's fair, though, is almost impossible, depending as it does on what side of the negotiating table you're sitting on.



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