Is this a rosy picture of Chinese industrialization? Does the Chinese government still face problems with industrialization, urbanization, and a migrant population of workers?

To say that the picture is rosy is too simple and ignores a host of issues. Certainly the picture for China is rosier than for some, but there are many problems. In the 1980s, when farmers began to produce more because individual households received profits for the first time, farm incomes increased rapidly. Then agricultural productivity improved, so agricultural prices did not keep pace with the rise in price of industrial goods. As a result, agricultural wages stagnated. As Chinese agricultural production becomes more efficient, the country will need fewer agricultural laborers. There are people in need of employment leaving rural areas, and there are urban factories that require workers. So it follows that there will continue to be massive migration to urban centers.

Migrants face great problems in the cities. The 700 million people currently involved in agriculture must undergo huge adjustments. Consider that in Japan in 1947, agriculture workers represented around 50 percent of the workforce; today, they are less than three percent. China will go through a similar process. The question is whether cities can expand fast enough to provide sufficient opportunities to accommodate this influx of workers. Factories are not going to be enough. There also has to be a large service sector. Nonetheless, factories can do a great deal to generate wealth and provide income for local governments to build infrastructure.

Migration poses many problems. If you were an employer and were getting almost unlimited workers coming into a place, how high a wage would you pay? Probably what the market would bear, with labor standards high enough for the workers to be willing to stay. That is typical of the free market. The important companies in China, because of foreign pressures and because of their knowledge, provide marginally better wages and circumstances for their workers. But there is a wide range of wages and working conditions. There are some local entrepreneurs, from places like Taiwan and Southeast Asia, who believe that cheaper is better. They tolerate minimal working conditions and incur many injuries among their employees. This system promotes exploitation, but it is how the market functions.

On the other hand, life in some of the factories I visited in the coastal areas reminds me of small college life in the United States. Many of the workers in these factories are young men and women who live together in a dormitory setting. They have clean, modern products, and the factory atmosphere even functions like a campus. These workers have a new kind of life, including compensation in the form of a salary, a good part of which they often send back home. In some isolated rural communities, the average income from the migrants is higher than the total locally generated income. Many of these workers return to their homes after a few years of factory work.

Do you think that Hu Jintao will continue the positive trends initiated by his predecessors? Is there reason to have confidence in his ability to address the challenges facing China?

Hu Jintao is a product of his generation. Like Jiang, he graduated in engineering around the time of the revolution. But Hu combined a high-technology background with very high positions in the western provinces of Gansu, Guizhou, and Tibet. Because Beijing thought he handled the situations there quite well, he was brought into the premier leadership group. China’s Standing Committee of the Politburo functions like a corporation of overseers. There are now nine members, but previously there were seven. Hu has been a member of that select group for the past decade, the only member of his age group to have that experience, and is therefore thoroughly familiar with all major decisions for the past decade. Hu is like a Washington insider, and his ascent in government is analogous to the elevation of a corporation’s vice-president to the top post.

Hu is a bright, cosmopolitan person with strong natural talents and 10 years of friendship with top officials. This latter characteristic is truly remarkable because it demonstrates that he can get along with all kinds of different people. This is the first time since Mao that China has successfully prepared for a transfer of power. Mao selected all kinds of successors who failed, but now China has someone who has been intimately involved in the highest levels of Chinese politics for a decade. In my opinion, Hu is not in a big hurry. He knows that he has a lot of talent and support. I think the chances are that Hu will have a very promising future.