China is on the cusp of change, not the change US President Barack Obama so convincingly spoke about four years ago but failed to bring about, not the change mainstream economists and political scientists always talk about but fail to deliver. The change China is to see will shape the course of a rising country. It will also influence the course of the global economy and international relations.
When it comes to change, the new leadership that will emerge at the 18th National Congress of the Communist Party of China will have a distinct advantage over leaders in the rest of the world. China's new leadership will have the advantage of a comprehensive road map laid out by its predecessors. The philosophy behind socialism with Chinese characteristics and CPC General Secretary Hu Jintao's principle of Scientific Outlook on Development has the potential to transform China's economic development model, and build a harmonious and moderately well-off society.
There are problems, however, which could slow down, if not thwart, the efforts of the new leadership. Transforming the country's economic development model is fraught with not so hidden dangers. There is, for example, the danger of slower growth, which could derail the country's march toward industrial modernization.
The new leadership, unlike their European and American counterparts, will not have serious economic downturn fears to deal with. They do, however, have to ensure that the economy stays on track to bridge the widening income gap and the growing wealth chasm between rural and urban residents.
The Chinese economy is still largely, if not altogether, dependent on exports. Economists and experts across the board feel domestic consumption is not growing at the desired pace. This is a challenge the new leaders have to overcome.
Besides, keeping the national economy on its three-decade growth curve does not entirely depend on the new Chinese leaders, for countries across the world are now more interdependent than they ever were. To breathe freely, the Chinese economy needs the rest of the world, at least its big trading partners, to have enough air in their lungs. With the United States and the European Union mired in crises, albeit of their own making, the world market is not what China can depend on, at least for not the next few years.
This is where the major challenge for China and its new leaders lies. Massive spending on infrastructure such as the $586-billion stimulus package, which played a crucial role in pulling the Chinese economy out of the Asian and global financial crises, also created bubbles in some sectors, most notably in real estate. Another such bubble may not bore well for the Chinese economy, given the current state of affairs.
Economic bubbles tend to inflate prices of goods and services that in turn drive away consumers, which certainly is not what the domestic market needs. Also, that is not what the aim of China's reform and opening-up is. Of course, the State should, and will, be there to bail out the national economy whenever the need arises. But from the lessons learned, the State should refrain from taking action that could create bubbles and inflate prices of goods and services.
Chinese leaders have, till now, found a way to deal with such problems, and there is no reason to think that the new leadership will not be able to do so even when external factors come into play, which they surely will.
There are areas, however, in which the new leadership does not have to depend on external factors to make a difference. Two of them are bridging the income gap and protecting the environment. The past 10 years have seen China, under Hu's leadership, taking giant strides to mitigate the two problems. It has increased the personal income tax threshold to ease the burden of the middle class and raised salaries to make things easier for the lower-income group. It has set rigid emission cut and energy efficiency targets to protect the environment.
What the new leadership has to do is to ensure that those, or even higher, targets are met.
After all, the health of the environment guarantees not only the health of the people, but also food security and protection against sudden natural disasters.
This is where Scientific Outlook on Development so importantly comes into play. By maintaining a balance between economic development and wealth generation, on one hand, and social and environmental health, on the other, it ensures that China stays on course to realize its aim of establishing a moderately well-off and harmonious society.
The new leaders, therefore, could work wonders with economic and social development, and environmental protection by following and implementing the agenda of socialism with Chinese characteristics and Scientific Outlook on Development in letter and spirit.
The author is a senior writer with China Daily.
(China Daily 11/09/2012 page10)