A New Stage of China’s Economic Development

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A New Stage of China’s Economic Development

Zeng Peiyan

Facing a volatile global environment, China’s economic and social development has entered a new stage that displays the following characteristics. First, China’s economic growth has “shifted gears.” With constantly increasing base figures and a transforming growth model, China’s economy is unlikely to see sustained double-digit growth in the future as it comes under the influence of various international and domestic factors. However, since China is still undergoing a period of economic growth, continued urbanization and improvements in living standards will continue to stimulate huge investment and consumption demand. The influx of an additional 10 million rural residents into cities each year will make up for decreases in the urban labor force. At the same time, new dividends in human capital will also be generated through efforts to improve the level of education and the quality of new members of the workforce. In consideration of these factors, it is totally possible for China to maintain a 7-8% economic growth rate for another decade or even longer. Second, the Chinese economy has entered a phase of transformation. At present, the imbalanced development of the Chinese economy is demonstrated in four aspects: demand structure, industrial structure, regional structure, and the structure of income distribution. Facing increasingly fierce international competition, China must lose no time in changing its economic growth model. The future path of China as a major emerging country will be determined by whether or not it is able to successfully change its growth model, cultivate new economic competitiveness, and achieve sustainable development while maintaining economic growth. Third, China has entered a period of development in which social problems are becoming increasingly pronounced. The past experiences of other countries show that the middle-income stage is often accompanied by the emergence of various social problems. Such problems, if not properly addressed, will not only damage government credibility and endanger social stability, but will also undermine our efforts to build socialism with Chinese characteristics. Fourth, China has entered a very challenging stage of reform. With greater political courage and vision, we must resolutely discard all notions and systems that are hindering our efforts to achieve scientific development. We need to identify areas where breakthroughs can be made through appropriate top-level design and overall planning, and lose no time in deepening reform in key areas.

(Originally appeared in Outlook Weekly, No.11, 2013)

The “World Dream” of the Chinese People

Hu An’gang

What exactly is China’s “world dream” for the 21st century? This dream can be summarized as “universal harmony in the world.” It is the reflection of the principle of “mutual benefit,” which has been proposed by the Chinese leadership, in the following five aspects. First, in economic terms, all countries need to cooperate with each other and draw on each other’s strengths to achieve common development and mutual benefit, thereby making economic globalization fairer, more equal, and more balanced. By doing so, we will be able to narrow the North-South gap and fundamentally reverse the trend of increasing disparity that has been seen over the past two centuries, with a view to promoting common prosperity and progress throughout the world. Second, in political terms, all countries need to respect one another, consult with one another as equals, and coexist in a peaceful and harmonious manner, thereby making global governance more democratic, equitable, and balanced. By doing so, we will be able to increase the say and voting rights of developing countries in world and regional affairs, so that all countries are able to assume responsibility for world affairs and jointly handle world affairs through consultations with one another. Third, in security terms, all countries should adhere to the principles of mutual non-aggression and non-interference in each other’s internal affairs, respect each other’s ability to independently handle security affairs, oppose attempts by foreign countries to subvert the legitimate government of any country, and oppose intervention in other countries’ internal affairs through the use of force or threat to use force. By doing so, we will be able to facilitate various forms of multilateral security, cooperative security and collective security, and safeguard world peace by actively responding to various traditional and non-traditional security challenges on a regional and global basis. Fourth, in cultural terms, all countries should value harmony and seek harmony in diversity, communicate with and learn from one another, promote cultural diversity and pluralism and protect the cultural uniqueness of various countries and ethnic groups, advocate cultural openness and inclusiveness, and maintain cultural traditions while making innovations in this regard. These efforts will serve to enrich the cultures of different countries. The world will be a place of universal beauty and harmony if people are able to appreciate the beauty of their own culture and the beauty of other cultures.  Fifth, in ecological terms, all countries need to assist one another in promoting ecological progress, and work together to address the global ecological crisis and the climate change crisis, so as to ensure harmony between nature and humans worldwide. Moreover, concerted efforts need to be made to follow the path of green development, to protect the Earth—the home that we rely upon to survive—and to build a world with a sound ecological environment.

(Originally appeared in People’s Daily Overseas Edition, April 7, 2013)

The Fulfillment of the “Chinese Dream” Will Benefit the Whole World                              

Xu Huixi

A unique feature of the “Chinese dream” is China’s commitment to developing along with other countries and sharing the fruits of development with them. Fact has proved, and will continue to prove, that the fulfillment of the “Chinese dream” will greatly benefit the entire world, and provide a new model for realizing mutual benefit and peaceful development in the international community. At present, Asia’s share of the global GDP has surpassed that of North America and the European Union, making Asia the world’s largest regional economy. Since 1998, the share of global outward FDI from Asian countries and regions has increased from 7% to 23%. The rapid development of the Chinese economy has also provided Asia with new opportunities. China’s imports, which stood at US$1.8178 trillion in 2012, have helped to create large numbers of jobs in Asian countries and other countries around the world. Moreover, with over US$3 trillion in foreign exchange reserves, China has become a major investor in Asia. In 2012, China made overseas direct investments in 4,425 enterprises spanning 141 countries and regions, with total non-financial direct investment for the year amounting to US$77.22 billion. In addition, China’s strategies of urbanization, boosting domestic demand, and adjusting the economic structure, as well as the institutional dividends that are generated through reform and opening up, will continue to drive world economic growth, including growth in Asian countries and regions. While striving to fulfill the “Chinese dream,” China will work with other countries to promote the development of bilateral and multilateral free trade zones; expand cooperation in emerging industries, infrastructure, finance, science and technology, energy, and water supply; boost cultural cooperation; and promote cultural exchanges and dialogue between cultures, so as to achieve common prosperity in Asia.

(Originally appeared in Economic Daily, April 8, 2013)

Thriving Development of Chinese-Style Democracy

Li Shimo

With a new generation of Party leadership taking to the stage amidst a smooth, well-coordinated, and orderly transfer of state power, China has shown the world that Chinese-style democracy is thriving. This is demonstrated in the following aspects. Firstly, the CPC has the capacity to adapt to the trends of the times. Having been in power for 63 years, the Party has demonstrated superb adaptability and a capacity for self-rectification during the eventful years of its governance. The sweeping changes that Deng Xiaoping introduced, namely the policies of taking economic development as the central task and carrying out reform and opening up, have allowed China to become the world’s second largest economy in the space of just 30 years or so. China’s new generation of central collective leadership is facing a global landscape that is very different from the one that was seen a decade ago. As it has done in the past, the Party will actively adapt to the new situation through its own self-renewal, and respond effectively to new challenges brought about by rapidly changing international and domestic environments. Secondly, the CPC has a system for selecting and appointing virtuous and talented people. Given how so-called Western “experts on China” have repeatedly emphasized the problem of corruption in China, many Westerners may find it hard to believe that the level of competition in the selections of officials that goes on within the CPC, whose leadership is stipulated and protected by the Constitution, surpasses that of any other political organization in the world. With an entire set of sound mechanisms in place, the Party employs intricate and meticulous procedures for selection and appraisal of officials, so as to ensure that only outstanding people are selected. Thirdly, the legitimacy of the CPC’s governance is deeply rooted in Chinese people’s hearts. The CPC is not only the founder of the People’s Republic of China, but also the leader of China’s modernization drive. Although China has experienced periods of extreme difficulty since the Party came to power, the majority of Chinese people have never lost their faith in the CPC. Such trust has given the Party the time and room to reconsider its policies and engage in self-renewal. Over the next few decades, the CPC is certain to win greater political support as China continues to develop. Many developing countries have realized that Western democracy is not a cure-all for all problems. Without a doubt, China’s success will become a greater source of inspiration for these wavering countries.

(Originally appeared in People’s Daily Overseas Edition, April 1, 2013)

The Creativity of China’s Political Party System

Liu Honglin

First, China’s system of multiparty cooperation under the leadership of the CPC has created a new model for relations between political parties. This model is characterized by consultation and cooperation, with the CPC acting as the political core. From the perspective of harmony and unity, the relations between China’s political parties have created a political environment in which a strong leadership core is accompanied by widespread political support; the promotion of democracy is accompanied by unity; harmony in diversity can prevent factional strife between political parties; and social stability can be maintained while fostering the harmonious coexistence of different parties. As such, these relations demonstrate a balance between uniformity and diversity. Second, the system whereby the CPC governs and the other political parties participate in governance represents a new model for governance by political parties. In China, the relationship between the CPC and the democratic parties is one in which one governs and the others participate in governance, and in which one leads and the others offer their cooperation. This is a new governance model that is able to avoid not only the centralization of power that is caused by the long-term governance of one party under a one-party system, but also the political opposition between the ruling party and the opposition that is caused by competition between different political parties under a two-party system or a multiparty system. As a result, this model facilitates social integration, political stability, social harmony, and close contact and coordination between all sectors of society. It encourages active, creative, and concerted efforts by all parties in the development of the country and society, and is conducive to achieving the unity and solidarity of the Chinese nation. Third, by defining the duties of the democratic parties as “political consultation, democratic oversight, and participation in the deliberation and administration of state affairs,” China has created a new form of democracy and enriched the concept of modern democracy. Just as electoral democracy and voting democracy are forms of democracy, consultative democracy and participatory democracy are also forms of democracy. Moreover, cooperative democracy, which is based on political rationality, is undoubtedly a form of modern democracy, one that accords more closely to human rationality than forms of democracy that are merely based on competition. China’s multiparty cooperation combines various forms of modern democracy, including cooperative democracy, consultative democracy, and participatory democracy. It accords with the contemporary global trends in the development of democracy, and has enriched the concept of modern democracy.

(Originally appeared in Journal of the Party School of the CPC Central Committee, No.2, 2013)

The Advantages of China’s System in the Transfer of Power                             

Tu Haiming

China has achieved a smooth and calm transfer of power that began with the Eighteenth National Congress of the CPC in 2012 and ended with the National People’s Congress and the Chinese People’s Political Consultative Conference (CPPCC) in 2013. China has created a new model for the transfer of power that is different from that of the West. This may be referred to as the Chinese model for political succession, and China’s advantage in political development. Firstly, China has achieved the standardized and institutionalized transfer of power. China has a set of rules concerning the selection of outstanding political talent and the smooth transition of leadership. These rules, which are “Chinese advantages” in themselves, are the result of the pioneering efforts made by several generations of Chinese Communists since the CPC came to power over 60 years ago. Efforts to standardize and institutionalize the transfer of power have ensured the continuity of China’s development, thereby injecting new life into its political development. Secondly, the spirit of democracy is embodied in every aspect of China’s mechanisms for the selection of talent. The mode that the Party employs for the transfer of power consists of fostering officials, engaging in democratic consultations, and holding democratic elections. The Party often switches young officials between different positions to enrich their experience, enhance their abilities, broaden their horizons, and improve their overall competence. Moreover, whenever there is a change of leadership in important positions, we solicit opinions within the Party, and sometimes even consult with democratic parties, federations of industry and commerce, and personages with no party affiliation. In addition, leading officials at both central and local levels must undergo a process of democratic election in order to be promoted. Only by going through all these procedures will a leading official be able to rise above the competition. This set of mechanisms for selecting leading officials, though appearing simple on the surface, embodies the spirit of democracy in its every detail. Reflected in each of these details are the institutional guarantees provided by the Constitution and laws, and an entire set of organizational procedures and principles for the handover of power between old and young officials. Together, these elements constitute the steady Chinese model and China’s distinct advantage. Thirdly, the Chinese model for the transfer of power has been further improved. With over 80 million members, the CPC is the world’s largest political party; and with a population of over 1.3 billion, China is the world’s most populous country. Therefore, the smooth transfer of power at the highest level of the CPC benefits not only the Chinese people, but also the whole world.

(Originally appeared in Wenhui Daily (Hong Kong) ,March 27, 2013)

China Has Mounted a Satisfactory Response to the Global Financial Crisis                  

Lin Yifu

Looking back on the recent global financial crisis, it is evident that China has mounted an effective response to the crisis and achieved a rapid turnaround in its economy. China’s recovery has also stimulated the economic recovery of resource exporting countries, emerging economies, and developed Western countries. During the past five years, China has made breakthroughs in spaceflight, lunar exploration, and satellite navigation. It has increased the overall length of its expressways by over 50%, surpassing the US in terms of the total length and quality of expressways. Moreover, significant achievements have also been made in the development of high-speed railways. Grain output has increased for nine consecutive years, the income gap between urban and rural residents has stopped widening for the first time since 1986, government spending on education has reached 4% of the GDP, and the rate of enrollment in higher education has risen to 30%. China’s response to the crisis has also stood well in comparison to developed countries. China’s average growth rate for the past five years stands at 9.3%. Even the 7.8% growth rate that China achieved in 2012 is remarkable. There are two reasons for saying this: first, China’s rate of dependence on foreign trade is 50%, which is significantly higher than that of other major economies; second, although some Western countries appear to be recovering from the crisis, their economic growth rates remain lower than those prior to the crisis, and these low growth rates are based on huge government debts and high unemployment.

(Originally appeared in Shanghai Business Daily, April 17, 2013)

The Important Contributions of China’s State-Owned Enterprises                              

Li Xinping

With the development of the Chinese economy, a number of competitive state-owned corporations have emerged in China. The loosening of controls has also allowed for the robust development of a number of small and medium-sized state-owned enterprises. As the overall quality and competitiveness of the state-owned sector has risen, the ability of state-owned assets to retain their value, appreciate, and generate economic gains has increased significantly, and this has contributed greatly to the sustained, rapid, and sound development of the national economy. This is demonstrated by the growing influence and leverage of state capital as it gradually converges towards major industries and key fields that comprise the lifeline of the national economy and that are vital to national security. At present, over 80% of the assets of central government-owned enterprises are concentrated in the defense, energy, telecommunications, metallurgy, and machinery industries. By adjusting and optimizing the layout of the state-owned sector, we have channeled resources for scientific and technological innovation into key enterprises, which has greatly enhanced the capacity of these enterprises to drive the development of related industries. In recent years, greater efforts have been made to diversify forms of ownership in state-owned enterprises. Over 90% of state-owned enterprises have introduced the joint-stock system; over 60% of the operating revenue of central government-owned enterprises and over 80% of their net profit now comes from listed companies; and over 40 central government-owned enterprises have had their primary operations publicly listed in full. Through majority holdings and equity participation, state-owned enterprises have absorbed large amounts of private capital. This has increased the influence of the state-owned sector in the economy, allowing it to play a role many times greater than it otherwise could. The contribution that state-owned enterprises have made to public finance has been even more direct. Despite their decreasing share in the national economy, state-owned enterprises have always been a major source of China’s tax revenue. In 2007, state-owned enterprises began to turn over part of their capital gains to the state. Since then, the proportion of earnings that are required to be turned over has been gradually increased. In 2012, the 117 central government-owned enterprises recorded total profits of 1.3 trillion yuan, and paid 1.9 trillion yuan in taxes. State-owned equity has also been transferred to the national social security fund, so as to provide the general public with a more reliable social safety net. More importantly, state-owned enterprises have played an important role in underpinning the stable operation of the economy and society in exceptional times. From the end of 2008 to the middle of 2009, the global financial crisis had a severe impact on the Chinese economy. Facing a grave situation, state-owned enterprises put the needs of the public first by maintaining the supply of electricity, natural gas, and petrol, guaranteeing the continuation of infrastructure projects, stabilizing the prices of essential consumer goods, and ensuring adequate employment. Committing to these efforts irrespective of the cost, state-owned enterprises demonstrated a strong sense of social responsibility at a critical juncture. In addition, following the Wenchuan, Yushu and Lushan earthquakes, central government-owned enterprises raced to repair electricity, communications, and transportation facilities, ensuring that help could arrive in the shortest possible time.  

(Originally appeared in Economic Daily, May 30, 2013)

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