rict Communist control, the economic
influence of non-state organizations and individual citizens has
been steadily increasing. The authorities switched to a system of
household and village responsibility in agriculture in place of the
old collectivization, increased the authority of local officials and
plant managers in industry, permitted a wide variety of small-scale
enterprises in services and light manufacturing, and opened the
economy to increased foreign trade and investment. The result has
been a quadrupling of GDP since 1978. Measured on a purchasing power
parity (PPP) basis, China in 2003 stood as the second-largest
economy in the world after the US, although in per capita terms the
country is still poor. Agriculture and industry have posted major
gains especially in coastal areas near Hong Kong, opposite Taiwan,
and in Shanghai, where foreign investment has helped spur output of
both domestic and export goods. The leadership, however, often has
experienced - as a result of its hybrid system - the worst results
of socialism (bureaucracy and lassitude) and of capitalism (growing
income disparities and rising unemployment). China thus has
periodically backtracked, retightening central controls at
intervals. The government has struggled to (a) sustain adequate jobs
growth for tens of millions of workers laid off from state-owned
enterprises, migrants, and new entrants to the work force; (b)
reduce corruption and other economic crimes; and (c) keep afloat the
large state-owned enterprises, many of which had been shielded from
competition by subsidies and had been losing the ability to pay full
wages and pensions. From 80 to 120 million surplus rural workers are
adrift between the villages and the cities, many subsisting through
part-time, low-paying jobs. Popular resistance, changes in central
policy, and loss of authority by rural cadres have weakened China's
population control program, which is essential to maintaining
long-term growth in living standards. Another long-term threat to
growth is the deterioration in the environment, notably air
pollution, soil erosion, and the steady fall of the water table
especially in the north. China continues to lose arable land because
of erosion and economic development. Beijing says it will intensify
efforts to stimulate growth through spending on infrastructure -
such as water supply and power grids -