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2012-December-19

Keep to the Right Road

 

By staff reporter HOU RUILI

THE Chinese people have been exploring the road to development for 170 years. Since the first Opium War of 1840-1842, generation after generation of Chinese have fought against invasion, struggled for national independence, and strived to strengthen their homeland.

In 1949, the People’s Republic of China was founded with the Communist Party of China (CPC) in the leadership role. In a country that had fallen behind its Western peers and been agonized by poverty, the people of New China tried to build a socialist country. After experimenting how best to approach the road to Chinese socialism, in 1978 economics was placed at the top of the policy agenda, in the form of the country’s Reform and Opening-Up drive. In 1992, China reiterated its adherence to a market economy track after extensive theoretical debate.

In 2001, China entered the WTO, marking its integration with the global economy. In 2003 when the deadly SARS epidemic broke out in China, the country began reviewing some of the social defects that had developed alongside rapid economic growth. Policymakers proposed the concept of comprehensive, sustainable and scientific development as a guiding ideology for China in the early 21st century.

In 2008, China successfully held the Games of the 29th Olympiad in Beijing. In 2010 the World Expo was held to great acclaim in Shanghai. Also in 2010, China became the second largest economy in the world, second only to the U.S. This was a symbolic milestone signifying the extent of the country’s rejuvenation.

The year 2012 marks another milestone for the country. This year, the CPC put forward a series of new targets to be reached by 2020 – the building of a moderately prosperous society in all respects, the doubling of both nominal GDP and per capita national income, and the construction of a beautiful China.

Over the next decade, this beautiful China will attach greater importance to economic restructuring, democracy, social harmony, ecological sustainability and equality in social wealth distribution.

 

 
Section B of the Shanghai World Expo Park is to become a confluence of corporate headquarters. So far 13 enterprises administered by the central government have moved in. 

 

        The Road to Restructuring

In 2011, China’s GDP reached RMB 47.3 trillion (US $7.5 trillion). The average annual growth rate over the decade was an impressive 10.7 percent. The total volume of the country’s foreign trade increased 21.7 percent annually, making China the world’s largest exporter and second largest importer. As the country’s economy matures, however, the unsustainability of the growth paradigm driven by investment and export is becoming apparent.

Feeling the pinch of the global financial crisis, in 2009 China invested RMB four trillion in infrastructure to boost the domestic economy, as well as the world economy. That year, GDP increased by 9.2 percent. Side effects of this stimulus, however, have gradually appeared. These include excess production capacity, inflation and asset bubbles.

The scale of China’s export volume is massive. It exports enough to provide three and a half items of clothing and two pairs of shoes to 5.7 billion world citizens who don’t live in the country, every year. But China’s exporters lack brand power, meaning that they “earn only a paltry amount of ‘sweat money’ in a hefty contract, and this path is a dead end,” as summed up by guest research fellow of the Counselors’ Office of the State Council Yao Jingyuan.

The Chinese economy has to restructure. “The most distinctive feature of restructuring over the next decade will be a shift from a growth mode driven by export and manufacturing and massive investment toward that powered mainly by domestic consumption, service industries and improved productivity,” deputy director of the Development Research Center of the State Council Liu He said.

Innovation is the driving force behind economic restructuring. Zhou Ji, dean of the Chinese Academy of Engineering, holds that integrating science and technologies with economy and transforming the fruits of innovation to real productivity through engineering and manufacturing are the keys to innovation-powered development. Many Chinese scientific and technological innovation endeavors have attained world-class standards and results, China’s space program being a prime example. Other achievements include a 7,000-meter manned dive to the ocean’s depths, super hybrid rice, the Three Gorges Dam, the country’s high-speed railway, ultra-high voltage power transmission lines and ultra supercriticals power generation.

In the future, “China will strengthen the collaboration among enterprises, universities and different departments of scientific research organizations, and nurture a group of innovative enterprises to develop core technologies and independent intellectual property rights, create well-known brands and develop sustainable innovation capacity,” Zhou Ji said.

On the topic of improving incentive mechanisms in economic transformation and innovation, Xu Xiaonian, professor of the China Europe International Business School, made the following suggestions: First, the country should strengthen its protection of intellectual property rights. Second, private, foreign, and state-owned enterprises should be granted equal opportunities with respect to access to markets, capital and resources. Third, the government should seriously consider reducing taxes in order to allow enterprises to make more profits and the people to enjoy higher incomes; it should also change the interventional mode of investment to that of enterprise profit- and market-driven investment.

According to Hu Jintao’s report at the 18th CPC National Congress, ensuring China’s productive economy is key to the country’s future. Hu stated that policies and measures to promote the real economy will be introduced, their aim to promote sound development of strategic emerging industries and advanced manufacturing industries, to quicken the upgrading and transformation of traditional industries, to fuel the development of modern service industries, and to lend support to micro and small enterprises, especially those dealing in advanced technology.

Cheng Siwei, former vice chairman of the Standing Committee of the National People’s Congress, pointed out that the capacity of labor to create wealth could be raised through such means as improving labor productivity and the efficiency of capital utilization.

Improving China’s economic structure to promote long-term, sustainable development will not only benefit Chinese citizens, but also be a positive contribution to the world economy. When China grows, the world does too.

The new-generation leadership of the Communist Party of China proposed that China continue to expand its economy and adapt to the changing global economic landscape. It will push forward innovation, place equal emphasis on imports and exports, and raise the comprehensive efficiency of foreign capital in the country. China will also speed up its enterprises’ expansion into overseas markets and improve bilateral, multi-lateral and regional relationships, thereby enhancing its ability to weather international economic risks and slumps.

The Road to Democracy

The success to date of China’s social development agenda shows the strength of the CPC’s leadership in the country’s political system. China’s political democracy is mostly embodied in its open and democratic multi-party cooperation and political consultation system that encourages wide participation in the policy-making process.

China’s multiparty cooperation system is different both in theory and practice from the systems of government in the West. In China’s political processes, the CPC is in the leadership role, but nonetheless advocates democracy and accordingly listens to the suggestions of other parties.

China’s political system is not adversarial. Its multi-party cooperation system finds strength in its capacity to integrate opinion, Party secretary of the Central Institute for Socialism Ye Xiaowen said. The system not only embodies and carries forward the spirit of inclusiveness that is a quintessential aspect of traditional Chinese culture, but also demonstrates a brand-new Chinese democracy.

As the new CPC leadership strives to deepen reform of China’s political structure, the multiparty cooperation system will provide a good basis to improve the country’s socialist consultation system of democracy. This system is the right choice for China – it is low-risk and appropriate to the Chinese situation. Specifically speaking, China will push ahead with the multi-level and institutional development of its political consultative democratic processes.

Democratic consultations should become more widespread, the results of which should trigger real action through the People’s Political Consultative Conference. In this system, people can exercise their right to have their opinions heard on issues across the board, from major aspects of social and economic development to specific suggestions with regards to local neighborhoods.

Last May saw the debut of a “motion system” for Party representatives at Shanghai’s 10th CPC Congress. The new system aims to promote social reforms in the form of joint proposals by multiple Party representatives. Yu Zhengsheng, Secretary of the Shanghai Municipal CPC Committee, pointed out that the system is a fresh attempt in the CPC’s endeavors to improve its governance and be more democratic, scientific and law-based.

The “motion system” for Party representatives had been tested at Shanghai’s township-level CPC committees for 12 years. In Lüxiang Township of the city’s Jinshan District, for example, the system is as follows: one Party committee member communicates with 20 Party representatives, one representative with five Party members, and one Party member with five non-Party persons. In this way, an extensive network of communication is maintained, and Party members become the bridges connecting ordinary people to Party organizations.

Through this network, problems relating to the lives of the common people can be submitted to Party committees. Liu Hongbing, a professor at the Shanghai Municipal Party School, pointed out that in essence the “motion system” is an embodiment of Party members’ rights. The issue of key concern to Party representatives is still that of whether or not they can truly exercise their rights to supervise and even impeach those in power. The motion system signifies that representatives indeed have these rights, which they employ to tackle anything from delayed construction projects to abuse of power by government officials. In short, the motion system is the essence of China’s ever deepening political reform of its government institutions.

The Road to Harmony

Although China has developed rapidly for 30 years to become the world’s second largest economy, it is still afflicted by huge gaps in people’s incomes and living standards and welfare eligibility among different groups, unbalanced regional development, and a general rural-urban divide.

In the coming 10 to 20 years, China is expected to experience the world’s fastest urbanization. This is countered, however, by the existent 300 million rural population marginalized by the urbanization process. They and their families now work and live in cities, but are still classed as rural residents. Without permanent urban residency, they are deprived of the rights to the same social security and benefits as their urban neighbors and colleagues. Such discrimination has also crippled their ability to contribute to the growth of urban consumption. The removal of the urban-rural divide, therefore, is key to China’s urbanization ambitions and goal of common prosperity.

Regional gaps are also a key concern. Since China implemented its “Develop the West” program 12 years ago, the central government has invested heavily in building highways and protecting the environment in the poorer provinces and regions in the central and western parts of the country, and introduced subsidies and investment incentives to level the playing field between the east and the west. The result is that most cities and provinces in central and western China have enjoyed growth rates higher than the national average over the past decade. But disparities between the east and the west of the country are still obvious.

Income inequality is another social woe. Well-known Chinese economist Justin Yifu Lin recently commented that China is facing a widening income gap, manifest in a shrinking share of labor income in the distribution of national income. Income inequality is the problem at the heart of a system that is long overdue for reform. “Proper handling of the issue will lead to social harmony and ensure the fruits of development are shared by all the people,” Lin said.

“Sharing the fruits of development” is a goal explicitly stated by the new leadership of the country. The fruit in this case is fairness: fairness of rights, opportunities and rules. In terms of tangible policy, this means more funds will be allocated to improving the lives of China’s poorer citizens and narrowing the country’s income gap.

Although the Chinese people nowadays enjoy much improved living standards, the growth rate of their incomes has not matched the speed of economic growth. According to the China Statistical Yearbook 2011, from 2001 to 2010 China registered an average annual growth of 10.5 percent for its GDP and 20 percent for its fiscal revenue. But the average annual growth of per capita disposable income of urban residents was only 9.7 percent.

The government is soon to release a two-tier income distribution reform plan. This has been a work in progress for eight years. The plan includes a distribution and a redistribution scheme designed to guarantee that people’s incomes increase in line with national economic growth. The distribution scheme will ensure both efficiency and fairness, while the redistribution scheme will focus specifically on fairness.

The Road to a Better Environment

As a populous country, China suffers from resource shortages. Large-scale production and the blind exploitation of limited resources over past years have resulted in the deterioration of the environment to an unprecedented degree.

Owing to this deterioration, China must now seek a quality-based GDP growth that does not sacrifice the environment. The 2012 Scientific Development Report on China, released by the Chinese Academy of Sciences, outlines the introduction of a GDP quality index for Chinese cities. The report’s analysis comes to the conclusion that China must focus more on rational, efficient, sustainable, coordinated, energy-conserving and environment-friendly development.

In expounding the vision of China in the coming years, the country’s new leadership has afforded “ecological progress” a more prominent position. Safeguarding the country’s natural environment has been incorporated into the nation’s comprehensive development plan alongside economic, political, cultural and social progress. Ecological progress is seen as critical to the goal of building a moderately prosperous, beautiful China.

Environmental protection has long been at the top of the Chinese government’s work agenda. As early as 1978, the year opening-up and reform was initiated, China kicked off the “Three Norths” (northern, northwestern and northeastern China) shelterbelt program. Over the following years the central budget allocated more than RMB 130 million to planting trees and grass in arid central and western China. The program touched 42.4 percent of Chinese land territory, turning hundreds of thousands of hectares of sandy wasteland into farmlands, grasslands and forests, and creating greenbelts a total 4,000 km in length. The initiative promoted forestry, animal husbandry, the processing industry and tourism, and substantially benefited the economies of the greenbelt regions. In 1998 China launched another colossal ecological scheme to restore reclaimed land to forest.

“China is making massive eco-investments. In fact, they could be the largest of their kind in human history,” director of the Center for China Studies at Tsinghua University Hu Angang said. “Eco-investment is not merely a concept, it is now an integral part of national planning. We are already seeing the benefits. “

Last year Xi’an hosted the 2011 International Horticultural Expo. Major event activities took place in the city’s Chanba Ecological District which, years before, was an area heaped with garbage and soiled with sewage overspill. The municipal government dredged rivers in the region, planted trees and restored wetlands. As the environment recuperated, modern facilities were built in the sustainable development mode in order to attract hi-tech business and other environmentally friendly enterprises and events. Upon the conclusion of last year’s horticultural expo the district saw an influx of domestic and international investors that is transforming Xi’an into a booming industrial development zone. This case bears testimony to the fact that protecting the environment is also a kind of productivity.

A society cannot function without a healthy natural environment to sustain it. Ensuring the environment does not suffer in the course of economic development that tangibly improves people’s lives is the ultimate goal of social management.

China’s new leadership has pledged to expand and improve public services, and ensure all citizens enjoy their rights to education, employment, medical and old-age care, and housing.

China is set to further enhance its education sector, with emphasis on nurturing an innovative spirit among the youth and developing modern vocational education. The government is devising policies to encourage citizens to start their own businesses — a ground-up approach to boosting employment.

In addition, a “hybrid” housing system will be established in which the market and the government work together to ensure fairness and sustainability. The market’s role is to set the demand and supply of commercial projects; that of the government is to fund more low-income housing projects and ensure quality management of such projects.

China’s social security network is set to cover all people, rural and urban residents alike. New financing channels will be opened for the social security fund, and an operation mechanism established to retain and increase the fund’s asset value through appropriate investments.

“Under the public old-age insurance system, the annual pension for rural residents amount to only RMB 660. This is too low when compared to average per capita income,” deputy chief of the National Economy Research Institute of China Reform Foundation Wang Xiaolu said. “Raising the pension by 30 to 40 percent would significantly improve the quality of life of low-income rural residents. It would also be a big boost for consumption,” Wang concluded.

Health care is an issue of broad concern. The Ministry of Health has set the target of extending basic medical services to all rural and urban dwellers by 2015. So far, as many as 95 percent of the population have basic medical insurance that pays for up to 70 percent of holders’ in-patient expenses. Recently the central government issued a new decree on basic medical insurance, stipulating that in cases of major diseases that require costly treatment, policyholders are eligible for higher reimbursements. This decision will substantially alleviate patients’ financial burdens.

Chinese society is multifaceted and complex. Nevertheless, the goal to make this society a harmonious one respectful of nature is something that unites the country. The Chinese leadership may be new, but the purpose of government is the same as ever: to improve, step by step, the lives of the country’s people.

Retrospect and Prospect

1949

.The People’s Republic of China was founded

1971

.China’s legitimate seat at the United Nations was restored

1978

.The policy of reform and opening-up commenced

1992

.The target of a socialist market economy was established

.The mainland and Taiwan reached the 1992 Consensus

1997

.The PRC resumed the exercise of sovereignty over Hong Kong

2001

.China joined the WTO

2003

.The spread of SARS was successfully contained

.The Scientific Outlook of Development was put forward

2004

The protection of private property was incorporated into

the Constitution

Building a harmonious society was made a strategic task

2006

.Agricultural tax was abolished

2008

.The XXIX Olympic Games were successfully staged in Beijing

Two-way mail, transport and trade links were established

across the Taiwan Strait

Compulsory education covered both urban and rural areas

Chinese escort fleet began to operate in the Gulf of Aden

2010

.The Shanghai World Expo was a success

.China became the second largest economy in the world

2012

.The concept of building a beautiful China was put forward

2020

.Both GDP and per capita income will double the 2010 levels

.Construction of a moderately prosperous society in all

respects will be completed