Plan ponders most pressing issues
Xu BinglanChina Daily  Updated: 2005-04-06 06:52

Plan seems to have become an outdated word in recent years as China leaves behind the days of a planned economy.

But that does not mean it is a bad word. The question is what you mean by it. It can be a set of detailed stipulations such as how much money should be spent in the steel sector, how much rice should be produced and how many socks should be manufactured.

And it can also be an outline of policy guidelines which hint at the direction the country will take in its future development.

China will enter its 11th Five-Year Plan period next year and it seems this plan will be of the second category.

The National Development and Reform Commission has invited a group of researchers from government think tanks to draft the plan, which later this year will be circulated among government departments and provincial governments for comment. A revised version will then be submitted to the National People's Congress (NPC) during its 2006 session.

A good five-year plan is crucial as new problems keep emerging and the country needs well-thought-out strategies to deal with them.

Implementing the plan is important, but on a par is its formulation because when you detect problems you have to pick priorities and make strategic choices to tackle them, said Li Shantong, a veteran development strategy expert with the State Council Development Research Centre.

China faces a myriad of problems and challenges with new issues arising by the day.

But finding the focus of the 11th Five-Year Plan is not as overwhelming as it could be, as the vast majority of problems in recent years have fallen into four categories.

They are: how to guide the economy to a more efficient growth path to save natural resources and protect the environment; how to facilitate the process of urbanization; how to address social issues such as unemployment and the wealth gap; and how to position China in the world economy and co-operate with other economies.

Although the Chinese economy has become more efficient, it still lags well behind other economies in this regard. The country consumes far more energy and other resources than advanced economies for a comparable output. This growth pattern is not sustainable.

The country's environment pollution is also being stretched due to the rapid growth of heavy industries.

The environment, energy and natural resource issues should be the top concerns for the 11th Five-Year Plan, said David Dollar, the World Bank's China Programme director.

A key reason for China's lack of efficiency is the distorted price of land, water, energy and other resources, as well as loose regulations on quality and environmental protection.

This must be addressed.

Chinese experts have coined a phrase for the pursuit of a more efficient growth model, it is: "changing the approach for growth."

The more desirable approach the experts are promoting does not only concern consuming less resources and being more environmentally friendly, it is also about higher added value.

In global competition, many Chinese products are still on the lowest rung, and thus receive poor returns. Solving the problem requires innovation and the introduction of new technology.

And urbanization is a must for China's development, a process that has been accelerating.

China's urbanization rate stands at just above 40 per cent currently. It has the potential to reach between 55 and 64 per cent by 2020, depending on the policies the country adopts and other related factors, according to an estimate made by the State Council Development Research Centre.

But, however impressive this rate appears, the process of urbanization has not been entirely successful.

In fact, a debate is still raging over whether China should choose large cities or small ones when selecting an urbanization model.

On a local level, governments have basically followed their own agendas when following the process, meaning urbanization has often taken place in a rash and careless manner. Urban planning has been so poor in some cases that farmers who have lost their land to development have not been properly relocated or compensated.

Millions of farmers have thus rushed into cities which are unprepared for their arrival, leading to many social problems.

But such problems are not only caused by an influx of rural workers into cities.

The major social issues China needs to address in the coming years also include employment, the income gap, social security and social mobility.

Addressing these issues is vital in meeting the country's goal of building a so-called "harmonious society."

In the employment sphere, the key problem is how to create new job opportunities to make up for the job losses caused by economic restructuring and technological upgrading. A key to this is how to improve vocational training, which has long been a weak link in China's system of education. China has abundant sources of labour, but is short of skilled workers. This is a looming headache for the manufacturing sector.

China's income gap has been widening, mainly caused by thriving private and foreign businesses, whose owners and employees generally earn more than the rest of society.

But it would be unwise to limit income growth in the private sector.

The country is facing a pressing need to balance efficiency and social equity.

Income growth is a necessary incentive for maintaining the vitality of the economy.

On the other hand, the poor should also be taken care of.

This leads to the next issue, the building of a social security network.

A social security network is in place in cities. It is non-existent in the countryside and needs to be established from scratch.

So building a rural social security system needs to go on the agenda. The integration of the urban and rural networks in the future should also be taken into account.

The Chinese economy is becoming increasingly intertwined with the global economy. China and its economic partners seem not sufficiently prepared for its emergence as a world economic power.

To maintain a good external environment, China needs to deal with a series of issues such as improving trade relations with its partners, enhancing its position in the global industrial value chain, safeguarding itself against international economic pitfalls and utilizing overseas investment and resources in a more effective way.

(China Daily 04/06/2005 page6)

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