The Features of China’s Current Stage of Development

From: English Edition of Qiushi Journal Updated: 2011-09-20 13:22
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  Over recent years, I have had many conversations with friends from overseas who have expressed admiration for China’s rapid growth and the speed at which China is changing. They have been particularly impressed with China’s effective rescue and reconstruction effort following the Wenchuan Earthquake, its successful hosting of the Beijing Olympics, and its rapid turnaround from the global financial crisis. In fact, some have even questioned whether China is still a developing country or not. I always respond candidly, telling them that China’s miracles are the result of a system that allows for concerted efforts in ambitious programs to be made, the developmental progress that China has accumulated over the past 30 years of reform and opening up, and the unrelenting spirit of the Chinese people. I emphasize that China is now and will remain in the primary stage of socialism for some time to come, and that it is still the largest developing country in the world. This is the conclusion that we have come to in light of the reality in China, and it is evident from three fundamental aspects.

  Aerial view of World Expo Park located on the two banks of the Huangpu River taken in the early morning of April 23, 2010. / Photo by Xinhua reporter Fan Jun

 Firstly, despite the marked increase in our economic strength, we are yet to fundamentally reverse the structural contradictions and mode of extensive economic growth that have developed over a long period of time. Development is our number one priority. We are maintaining the continuity and stability of our macroeconomic policies and devoting our efforts to construction and development. China’s economic strength has increased significantly over the past 30 years of reform and opening up. In 2009, our GDP rose to US$ 4.9 trillion, making China the third largest economy in the world. Our output of major agricultural and industrial products was higher than any other country, and our imports and exports totaled US$ 2.2 trillion, making China the world’s largest exporter and second largest importer of goods. In addition, China’s foreign exchange reserves rose to almost 2.4 trillion dollars and our annual grain output has risen from 300 million tons three decades ago to over 500 million tons today, which has enabled us to feed one fifth of the world’s population.

 However, we must be aware of the fact that our productivity remains low, our capacity for independent innovation is insufficient and we are yet to fundamentally reverse the structural contradictions and extensive mode of economic growth that have developed over a long period of time. These things are primarily manifested in the following three aspects:  

 (1) China’s economic growth has been primarily driven by industry, while its agricultural foundations remain very weak. Our agricultural production is very much at the mercy of the elements. The contribution that progress in science and technology makes to agricultural growth in China is only 51%. This is 20 percentage points lower than in developed countries. Moreover, the service industry accounts for as little as 40% of the GDP in China, 30 percentage points lower than the global average and nearly 40% lower than France. Our service industry mainly comprises commerce, catering and other traditional service industries, with modern service industries such as finance, insurance, information and modern logistics still being in their initial stages of development. 

 (2) Our economic growth is overly reliant on the input of material resources and reliant on low cost advantages in terms of land and labor. Our level of energy consumption per unit of GDP is 2.78 times as high as the world average and our worker earnings account for less than 40% of our GDP. This is 10-15% lower than the world average. 

 (3) China has limited capacity for independent innovation. China lacks core technologies and world renowned brand names. The added value rate of our products is only 4.37% of that of Japan, 4.38% of that of the United States, and 5.56% of that of Germany. In other words, although many products bear the mark “made in China,” they are, in fact, designed overseas, their vital parts are made overseas, and they are marketed overseas. China is only involved in the labor intensive parts of the process, such as processing and packaging. As much as 90% of the commodities exported from China are affixed with the brand names of foreign firms. We are required to pay royalties to the overseas patent owners of these commodities, which equal 20% of the selling price for each mobile phone, 30% for computers and 20-40% for computer-controlled machine tools. Therefore, it is imperative that we transform the pattern of economic development, adjust the economic structure, and optimize and upgrade industries.

 Secondly, despite the marked progress that we have made in balanced development, significant gaps still remain between urban and rural areas, between different regions and between economic and social development. We are committed to balanced development between urban and rural areas, between different regions and between economic and social development. Addressing problems involving agriculture, the countryside and farmers is the number one priority, whereas gradually closing the gap between different regions is a key strategic task. Over the last 30-plus years of reform and opening up, the level of urbanization in China has grown from 17.9% to 46.6%, with some ten million rural residents becoming urban residents every year. This rate of urbanization is faster than any other developing country in the world. In the decade since we launched the strategy to develop the western region on a large scale, the GDP of the western region has increased at an average annual rate of 12%, which is 1.8 percentage points higher than the national average. Major breakthroughs have been made in the development of urban and rural infrastructure and in the protection of the environment in the western region. However, we must be aware of the fact that China is currently undergoing a process of rapid urbanization, and that our overall level of urbanization still falls short of the world average. Our level of urbanization is as much as 30 percentage points lower than France. The average per capita net income of rural residents is only 5,153 yuan per year, which is less than one third of the disposable income of urban residents. Moreover, many rural areas are still cut off and face drinking water shortages. Some rural residents still live under thatched roofs with no electrical appliances and little furniture. Although imbalances in regional development can be seen in many countries, this problem is particularly prominent in China. In certain underdeveloped areas in the western region, the average GDP per capita is only 1/10 of that in the coastal region. The economy has grown rapidly in recent years, but the development of social undertakings and reforms in social fields have lagged behind. We face a number of outstanding issues that are of vital interest to the people, such as the difficulty of receiving education and medical care and finding jobs. The social safety net, public medical care and other public service programs started relatively late and at a low level. In urban areas, we have to find jobs for 24 million people every year, and among them, some seven million are college graduates. In rural areas, 230 million rural residents have moved to the cities to seek employment, and there is still a surplus rural labor force of almost 200 million people waiting for reemployment. Therefore, balancing the development between urban and rural areas, between different regions and between economic and social development will be an arduous task.

 Thirdly, despite the realization of moderate prosperity for the general population, the number of poor or low-income families remains large. We are committed to putting the interests of the people first. The purpose of all initiatives conducted by the Party and state is to realize, safeguard and develop the most fundamental interests of the people in the broadest sense, and thereby ensure that the people are the purpose of development, the foundation of development and the beneficiaries of development. Between 1978 and 2009, the disposable income per capita of urban residents and rural residents has multiplied 8 times and 7.6 times respectively. Housing space per person among urban and rural residents increased from 6.7 square meters to 30 square meters and from 8.1 square meters to 33.6 square meters. Electrical appliances such as color TV sets, refrigerators and washing machines are no longer rare articles in ordinary Chinese families, and many Chinese people now have their own cars. The number of people living in poverty has decreased by nearly 240 million. Life expectancy in China has risen from 35 years in 1949 to 73 years in 2009. We have made nine-year compulsory education universal and achieved an adult literacy rate of over 93%. As a whole, the Chinese people have now attained moderate prosperity, with living standards increasing on a daily basis. However, we should not forget that China is a country with a population of 1.3 billion. If we divide our GDP by this huge population, we can see that our GDP per capita only ranks 99th in the world, or merely 1/12 of that of France. Moreover, our national income per capita falls outside of the top 100. Therefore, the moderate prosperity that we have achieved so far is of a low level, uneven and imbalanced. We still have 150 million people living on less than one dollar a day, and that number is more than twice the total population of France. We still have more than 40 million rural residents that lack basic living conditions, and another 23 million urban residents living on government benefits. Even in developed cities such as Beijing and Shanghai where the GDP per capita has reached US$ 10,000, there are still people living in poverty. For example, despite an average housing space of 33 square meters per person in Shanghai, its central regions still have more than 7,000,000 square meters of slums that are in urgent need of renovation. Therefore, bringing an affluent life to a population of 1.3 billion will continue to be a long and arduous task.

 It is therefore easy to understand that owing to our large population, our weak foundations and our late start, the overwhelming changes we have achieved so far cannot obscure the major issues and problems we are facing. Modernization has been a long cherished dream of the Chinese people, and we are determined to realize it with unrelenting efforts.

 It is the bitter experience of poverty and starvation in the past that has deepened the desire of the Chinese people for a secure and prosperous life, and this is a common desire that lies deep in the hearts of the Chinese people.

 It is China’s commitment to development as the top priority that is making the lives of the people better every day, and development as a fundamental principle has become deep-rooted in the hearts of the Chinese people.

 It is the bitter suffering from the ravages of war and maltreatment that the peace-loving Chinese people endured in modern history that allows us to cherish peace and fully understand that upholding world peace is both an international obligation and a prerequisite for our own development.

 We are fully aware that there will be numerous issues and problems on the path ahead. However, we have the fullest confidence in the prospects of our development. This is because we have cut out the socialist path of development with Chinese characteristics and developed a socialist theoretical system that serves as its basis. As long as we follow this path with stern and unwavering resolve, we will turn China into a modern socialist country, which is prosperous, strong, democratic, culturally advanced and harmonious.

(From Qiushi, Chinese edition, No.19, 2010)

Note:  Author: Member of the Standing Committee of the Political Bureau of the CPC Central Committee and Chairman of the Standing Committee of National People’s Congress of China

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