With Chapter 3- Global Trade 2.0- Plunkett goes to the developing world (quite literally, with anecdotes about his travels in India), and with it, China. While he has nothing new to say to the seasoned China Hand, there are a few trends here worth noting. In addition, he provided a handy to-do list of the challenges that developing countries need to face. Let’s whip out our red pens, go through them one by one and see if China makes the grade.

Greatly enhance infrastructure such as roads, highways, railways, airports and electricity networks.

China and infrastructure development are practically synonymous these days, but that’s not to say that this category doesn’t need work. While the highways and roads through much of the country are now world-class, the new airports are legendary, and the country’s vaunted high-speed rail system is the envy of the world (correction: this was written before the Wenzhou accident), the electrical grid faces constant brownouts and often fails to meet demand, and the country could use a better freight rail system to take pressure off the overloaded highways.

Grade: B-

Extend and improve public education systems, especially into the villages.

With fifteen years of schooling now universal in some coastal provinces (including Shanghai and Zhejiang), and literacy rates now reaching a very healthy 95.5%, the success of China’s public education system to create an immensely capable work force is obvious, even if still lacking at the tertiary level.

Grade: A

Control pollution and clean up existing environmental damage.

Nothing more needs to be said about this issue, though I have to take issue with critics who claim China is doing nothing to address these problems. (You can see the interview where I discuss this issue with Bill Dodson here) There’s simply too much to be done, and imposing the level of austerity necessary to make a significant dent in China’s pollution in a short amount of time would likely destabilize the country.

Grade: D

Provide access to basic health care services.

The country’s mostly government-owned and operated health care sector is a bureaucratic nightmare in need of extensive reform, and the demand for health care far outstrips the country’s ability to provide, given the limitations of trained doctors and medical infrastructure. The basic health care plan advanced under the Hu-Wen administration does provide some relief, but nowhere near enough.

Grade: C-

Create a social safety net that includes unemployment insurance, pension plans and retraining for laid off workers

Pension reform and unemployment insurance have now been introduced for most urban hukuo holders, and rural residents generally receive some sort of insurance from their local government, and employment services and training exist in some areas. The situation is probably commensurate with what could be expected from a country at China’s level of economic development without breaking the bank.

Grade: C+

Foster a healthy level of local consumer demand while evolving, from economies highly dependent on exports, to economies with vibrant domestic markets.

Until the mess of the banking system and property sector gets sorted out, the consumer sector will remain moribund. I see no signs of this happening in the next few years, however, and will probably remain the case until a crisis forces necessary reforms.

Grade: F

Provide greater economic opportunities to residents in rural areas.

China does provide greater economic opportunities to residents in rural areas- they can move to the city!

Grade: F

Enhance energy efficiency.

While China’s economy remains vastly inefficient in terms of energy intensity, there are concerted efforts underway boost the country’s energy efficiency, ranging across nearly every sector.

Grade: C+

Promote property rights and rule of law while fighting graft and corruption.

If Transparency International is to be believed, China, with their 78th place ranking, is actually on the high end of developing countries as far as their levels of corruption are concerned, trumping every other large developing economy except Brazil. Probably as good as could be expected.

Grade: C-

Overall Score: C

C? Well, China could do better, but they could do much, much worse, and there’s signs that improvement could be on the way in most categories, though the country has a long way to go.

Next time, let’s see what Plunkett has to say about the global middle class.