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No 'business as usual' after crisis

By You Nuo (China Daily)
Updated: 2009-06-15 14:05

Emerging from the long, dark tunnel of an economic crisis is always worthy of hearty applause.

But don't clap too soon. Entering a new recovery cycle may itself bring challenges that economic officials in this nation have never before encountered.

If managed poorly, there could be a "civil war" between the central and regional governments, especially those in the coastal and adjacent areas - a battle of conflicting development priorities and strategies. It is crucial that the visible hand of Beijing carefully guide local interests so they meet the interests of sustainable development.

The coastal region took a major beating from the global financial crisis that resulted in a loss of overseas orders and manufacturing jobs. Now that the recovery is coming along, local officials may imagine it could be easy return to the old track of picking up more global buyers and running local machines for longer hours.

That is a kind of prosperity led primarily by the manufacturing industry, namely factory jobs and factory wages.

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But in reality, in post-crisis times, China must begin to follow a completely new model in which its relatively wealthy coastal cities no longer depend single-mindedly on manufacturing for their prosperity.

This inevitable change of course is required by both the limitations in market demand and how much China can ultimately supply - and the need for a kind of economic growth based on much less energy use and resources than is possible in traditional manufacturing and construction.

Many of the environmental hazards that exist in this country were caused by the blind chase of manufacturing profits, damage caused by various forms of waste discharge.

Manufacturing-led urban growth is unsustainable. Further travel along on that road is like driving toward a cliff in top gear.

But right now, people may be seeing potentially very dangerous signs. After a few cities won Beijing's approval to drastically expand their urban land, more cities may be hoping to join in and have more to offer future manufacturers and land developers.

They are also busy pestering the central government for more export tax cutbacks on local manufactured goods, even though the global demand is expected to remain sluggish for a long time to come.

In the meantime, no Chinese cities, not even Beijing or Shanghai, have formulated a comprehensive plan for the services sector.

To expect all or a majority of Chinese labor to some day be accommodated by the manufacturing sector is an impossible business. The global market, despite its name, cannot be large enough to match the immense size of China's hardworking labor. This is a given. But not many Chinese have come to realize it.

Nor is it realistic to expect goods sold to domestic consumers will all be produced in the coastal cities.

The central government may need to moderate or discourage the manufacturing ambitions of coastal cities when it comes to charting the economy to a new course. It may put a cap on GDP growth in coastal cities - unless it is proved to be green and matched by a number of social development indexes ranging from free medical coverage, low-cost housing, diversity in education - including vocational schooling - dependable public transit and utilities and low carbon emissions.

The central government should not succumb to the regional desire of just building more, whether it is factories or housing estates, without adding due services. Beijing should have the strong character to see to this matter.

younuo@chinadaily.com.cn