By Lau Nai-keung

The annual meetings of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) mark the beginning of another term of government to implement the policy direction set down by the 17th National Congress of the Communist Party of China last autumn.

After three decades of reform and opening up, and the accompanying rapid development, many problems have arisen - social, political, and environmental - that need to be addressed. The Party congress made a paradigm shift to Scientific Outlook on Development. As General Secretary Hu Jintao put it: "In the scientific view of development, the number one basic principle is development, the core value is people-oriented, the basic requirements are comprehensive, coordinated and sustainable, and the fundamental method is overall planning and all round consideration."

Economic development is for the welfare of the people especially in the areas of education, creation of employment through innovation and entrepreneurship, fair distribution to raise the living standards of the lower income groups, social security, and medical care. China is now willing to sacrifice GDP growth for the general welfare of its people.

The NPC and CPPCC meetings, apart from their mandatory functions, can be regarded as a 5,000-member strong focus group of opinion leaders. It is a concentrated expression of comments and suggestions, which is all the more important during the conclusion of what can only be described as a period of spectacular success, and the beginning of another stage of development where social justice, human development and environmental conservation are as important, if not more important than economic development.

The country is now in completely uncharted waters, and how to go about it, the comments and advice of this elite group are especially important.

To create a more effective institutional framework to implement the new paradigm, the State Council will be reorganized into fewer but bigger units, and the proposal is being discussed by the NPC. The most welcome move relates to upgrading the environmental protection body to a ministry. In the spirit of gradualism and harmony, however, the reform can only be described as mild. The Ministry of Railways, for example, still maintains its own identity apart from the newly formed Ministry of Transport. Reforms in the financial sector are minimal. But one thing is for sure, change is in the air, and this is the direction to go.

The more immediate concerns are still issues related to the economy. With a worldwide recession lurking on the horizon, and concerted international pressure to appreciate the yuan, China's export growth is expected to slow down this year. Internally, tightening measures are still in force to cool the economy, especially the real estate and stock markets. More stringent labor and environmental measures have also been enforced. Consumer prices are rising, especially in food and energy.

All these factors put together will lead to slower growth this year, in the region of 8 percent. Many people fear the situation will degenerate into that of a stagflation.