The credibility of a country is also measured by its
health risk assessment
Although the endless soap opera
of the global debt crisis is feeding the fears of many in the west, from my
Chinese window as a private contractor, I have a more balanced judgment that
raises questions about the health and wellbeing of China’s citizens.
Obsessed by the huge debts of
the western countries, the rating agencies reflect the increasing distrust of
investors. But are they properly advised? Besides financial considerations,
they mainly disregard the fact that the credibility of a country is also
measured by its health and environmental situation.
Rightly celebrated for its
outstanding financial situation, the People's Republic of China obviously
deserves its Triple A rating. But behind the curtain, something is cracking.
Why are so many leaders and wealthy Chinese families persistently seeking to
send their children abroad, often with the aim to acquire some western
nationality? How to understand the desire to leave the world’s most vibrant
economy to settle in countries that have been financially battered and appear
to remain mired in a slump considerably into the future?
The state-owned China Daily
reported on Nov. 1 that nearly half of the country’s millionaires are
considering leaving the country, with 14 percent of them already having applied
or in the process of applying for emigration. The story quotes a study, Private
Banking White Paper 2011 released jointly by the Hurun Research Institute and
the Bank of China. The results are said to be based on interviews conducted in
18 major cities, with the average asset holdings of the 980 respondents
surveyed, average age 42, holding Rmb60 million (US$9.44 million).
While half of the investors
said they want to leave for better overseas education opportunities for their
children, according to the story, observers believe that personal and capital
safety is an increasing concern for the rich who are choosing to transfer their
wealth overseas. Their preferred destination: North America.
At least part of the answer
lies in the environmental degradation that people in China face. It is not a
theoretical topic. It strikes every family. Hospitals are overflowing with
patients with frightening symptoms. Many have not revealed their reasons for
concern. Now, however, people have started to speak.
Weibo, the Chinese version of
Twitter, is filled with people who appear to believe in anything the government
says. Disillusionment is considerable and accelerated with the deadly July 23
crash of the country’s showcase high-speed rail train in Wenzhou on July 23,
2011, that took the lives of 40 and injured another 190. Up to then, the
feeling was that China could do almost anything. But the accident led to a wave
of public outrage. Now, in a report last week, the government says there were
serious design flaws in the signaling equipment, crash investigators found
sloppy development of the signaling equipment, bidding irregularities, safety
inspectors who didn’t do their job and other problems.
Among other things Weibo users
hold responsible: air pollution, a food chain full of heavy metals, hazardous
materials at home, all enhanced by the passivity of local authorities. Chinese
newspapers abound with health incidents. One day mercury is detected in a soft
drink; another day melamine is found in a rice protein concentrate. In February,
it was discovered that 200,000 metric tons of vegetables originating in Hainan
went on sale despite the fact that they had been contaminated by the dangerous,
illegal pesticide isocarbophos despite the fact that it had been banned in 2004
– seven years earlier.
While government officials are
aware of these situations, they are reluctant to make decisions that would slow
the mandatory increase of the living conditions for China’s remaining poor –
estimated at 488 million living on less than US$2 per day in 2009 despite the
country’s stellar gains.
Already shaken by the impact of
the deceleration of the world economy, authorities play with public
announcement effects. Here an environmental charter for companies that are
exporting. There the setting up of Eco Cities. These are no more than a smokescreen
because the cost of the cleaning up of all China could reach an astronomical
amount. Even worse, authorities tolerate the unthinkable -- as recently
authorization given by the Ministry of Health of the presence of Staphylococcus
in frozen products for everyday use such as rice. Thus the health bill debt
could be unreachable for future generations.
So it is logical that large
numbers of Chinese are looking to escape from this situation. Why their
children should have to pay for what they are not responsible?
These environmental and health
issues should be debated by the rating agencies in addition to the country’s
economic performance. In summer of 2011, although everyone predicted the worst
concerning a downgrade by Standard & Poor’s of the United States because of
its high debt load and seeming political inability to do anything about the
issue. That was followed in December when Fitch also warned of a possible
downgrade if the US didn’t get its house in order. Nonetheless, this country
borrows always at low rates, probably because the US still offers a healthy and
secure environment.
The ratings agencies should
consider widening their regimes to take into consideration more than just the
ability to issue certain types of debt obligations and debt instruments
themselves. A credit rating for an issuer perhaps should take into
consideration more than just creditworthiness from an economic standpoint. If
China faces a long-term crisis from the vast amount of environmental cleanup it
faces, and the health of the hundreds of millions of people who must make the
state work, there should be some rational criteria with which to measure these
problems. If China were to take the path of strengthening its institutions
towards greater democracy, efficiency and environmental standards, there should
be nothing about that which should disturb investors.
François de la Chevalerie
Asia Sentinel
(François de la Chevalerie is a
contractor based in Tianjin, China.)
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