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    China Business
     Oct 13, 2005
New Five-Year Plan called 'revolutionary'

BEIJING - The 16th Central Committee of the Communist Party of China (CPC) concluded its fifth plenary session here on October 11, which examined and approved proposals for formulating the 11th Five-Year Plan for National Economy and Social Development. Since 1949, China has, in emulation of the defunct Soviet Union, officially directed the economy according to Five-Year Plans, which lay out growth goals in various industries for the next half decade.

The four-day meeting discussed a draft proposal set forth by the

CPC Central Committee on the 11th Five-Year Plan (2006-2010). Participating in the meeting were 191 members and 150 alternate members of the CPC Central Committee. The Political Bureau of the CPC Central Committee presided over the meeting.

Hu Jintao, general secretary of the CPC Central Committee, gave a working report on behalf of the Political Bureau of the CPC Central Committee. Premier Wen Jiabao then further explained the draft proposal. China's new Five-Year Plan, the roadmap for the country's development in the next five years, will bring revolutionary changes, analysts said here in Beijing.

From "getting rich first" to "common prosperity"
The theory proposed by the late chief architect of China's reforms, Deng Xiaoping, in the 1970s to allow some of the people to get rich first, will give away to "common prosperity" in a bid to bridge the growing gap between the rich and the poor, and to avoid polarization of society.

This will represent a historic adjustment to the pattern of five-year plans since China began its market-oriented economic reforms in the 1970s. "It shows that the CPC will give special attention to the construction of a balanced market economy," said Hu Angang, an expert on macroeconomics at Qinghua University.

After China decided to launch economic reforms in 1978, Deng Xiaoping proposed the principle of allowing some regions and people to get rich first in order to achieve a final "common prosperity". The new idea departed from egalitarianism, yet managed to energize the country. More than 20 years later, the average gross domestic product (GDP) per capita has risen above US$1,000 and is expected to reach $3,000 in 2020.

But China's rapid economic growth has engendered new problems. The lowest-income families, comprising the bottom 10% of all families, own less than 2% of all assets in the society, while the highest-income families, or the top 10% of all the families, own over 40% of total assets, government statistics show.

Chinese leaders have warned against extremes of poverty and wealth, increasing unemployment and intensified social conflict. "Common prosperity is not an unreachable goal, but the basic principle and pursuit of socialism," said Hu.

From "growth rate" to "sustainable development"
The recognition that economic growth is not equal to economic development and that growth is not the final goal of development, will be included in the 11th Five-Year Plan for the first time, said analysts. Top leaders have criticized old concepts of economic growth many times, saying that "economic development at the center" does not mean "with speed at the center."

Blind pursuit of economic growth has led to blind investment, damage to the environment and false statistics. The country's helmsmen are worried that without changing China's concept of growth, the economy might develop an unbalanced structure with a lack of driving power.

In the 11th Five-Year Plan, the economic growth will thus be defined as "serving the people to improve quality of life," said analysts. "A prediction can be made that in the next five years China will pursue growth in a fair, balanced and sustainable way," said Tang Min, chief economist with the Asian Development Bank's China office.

China will control the use of foreign investment in the 11th Five-Year Plan period, said experts. Government statistics show that foreign trade accounts for over 70% of China's economy, and frequent trade frictions have caused huge costs to the economy.

At the same time, China has become a major global consumer of energy resources. International energy institutions predict that from 2002 to 2030 around 21% of the world's new demand for energy resources will come from China. In 2004, nearly 50% of the petroleum used in China was imported. China will try to change its heavy reliance on foreign investment and resources to secure its national economy in the next five years, said analysts.

Favorable to social services
The new five-year plan will bolster social services to deal with imbalances in economic and social development, said analysts. China's top leaders stressed that it has become urgent to solve the problem of strong economic growth accompanied by a weak social safety net.

The problem of social security is particularly serious in the countryside, where the health care system and welfare are extremely weak. During the period from 1993 to 2003, the number of people with no access to medical insurance in the country increased from 900 million to one billion, with the percentage rising from 67.8% to 80.7%. The number of uninsured in urban areas rose from 96.53 million in 1993 to 300 million in 2003.

"In the next five years, China will place more emphasis on science and technology, education and health care in policy and investment," said Ding Yuanzhu, a researcher at the economic and social development research institute under the National Development and Reform Commission. All rural children are expected to enjoy nine years of free education before 2010, which will reduce farmers' economic burden by 100 billion yuan ($12.37 billion) every year, analysts said. "The poor and the weak will get more protection and have greater access to social welfare," said Ding.

(Asia Pulse/XIC)

Domestic threats to China's rise (May 20, '05)

Striving for sustainable development (May 10, '05)

All strength to China's industrial sector (Jul 5, '01)

China: Westward ho! (Feb 2, '00)


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