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China's boom comes with concerns

By CNN's Stan Grant in Guangzhou

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China's economic boom has been linked to its strengthened military.
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HOT ECONOMY
GDP GROWTH
2001: 7.3 percent
2002: 8.0 percent
2003: 9.3 percent
2004: 9.5 percent
2005: 8.0 percent (est.)
Source: IMF

(CNN) -- As China's economic boom continues unabated, some analysts are questioning the implications that come with such success as it establishes its place in the world.

Beijing's ever-growing economic clout has enabled it to boost military spending, raising concerns in the region.

The U.S. believes China is racing to complete 23 new amphibious ships able to ferry troops and tanks, plus 13 new submarines -- helping to tip the military balance in Beijing's favor in the flash point Taiwan Strait.

Some analysts also believe its hunger for natural resources is seeing it do deals with rogue states.

"China finds itself lining up with pariah states -- Sudan, Iran -- states that the United States has said whose behavior is inappropriate and should be sanctioned ... China is there protecting them," political analyst at the Hong Kong University of Science and Technology David Zweig argues.

Nerves have also been frayed over Beijing's aggressive foreign policy stance.

Chinese Premier Wen Jiabao recently said that he wanted the army capable of winning any war it fights, while Beijing has passed a law authorizing the use of force if Taiwan moves towards independence.

Recent anti-Japanese rallies, hardly discouraged by Beijing's leadership, have also raised concerns over Sino-Japanese relationships.

Economic battle

But despite the talk of regional threats and security, the real battle lines for now are economic ones.

China holds a big trade surplus with the U.S., and its cheap labor force is accused of undercutting American jobs.

Pressure is also building on China to revalue its currency, with critics saying that the yuan is artificially low, giving China an unfair export edge.

It's cities like Guangzhou in Guangdong province that China is relying on to continue powering its growth.

Guangdong's economy grew by 14 percent last year, while $10 billion of foreign investment poured in.

Riding this boom is a new breed of communist party leaders like Liang Shiling, who oversees one of Guangzhou's big shopping districts.

Liang says Guangdong is a perfect example of China's big experiment with capitalism, which has embraced the freedom to travel to work to buy and sell.

But such freedoms still don't include the freedom to vote, and she won't be drawn on the question of democracy, instead sticking to the party line that "to get rich is glorious."

"We serve the people and seek benefits for them. If we are productive in our job, and the people are satisfied, we will feel happy, too," Liang says.

China, economically strong, and growing in military and diplomatic strength, now seeks to create what its leaders call a "harmonious society."

But lurking beneath the surface are the hundreds of millions of rural poor, and bringing them bringing them into the "new China" will be an enormous challenge.

As Liang says, China remains "a harmonious society under construction."


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