Lower growth targets a mighty task

0 CommentsPrint E-mail Global Times, March 10, 2011
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The government has set its sights on an annual economic growth of 7 percent over the next five years, marking a shift from growth to quality of life.

The rate may look daunting for many countries that are still struggling with stagnation. But for an economy that has been growing fervently for three decades, and at an average rate of 11 percent in the past five years, slowing down will be a mighty task.

Since the 2006 change of the economic development slogan from "fast and good" to "good and fast," the central government has increased efforts to put the livelihood of the people at the center of the country's 12th Five-Year Plan.

The leadership has stated that should the country become rich but with its people lagging behind, this growth will be meaningless.

The change of development model is echoed in cities in Guangdong, where local governments are planning to use a "happiness index" instead of GDP growth to measure officials' performance. As one of the fastest growing regions in China, Guangdong is setting the pace by aiming to grow at 8 percent in the next five years.

But not all local governments are willing to follow suit. Nine provinces plan to double their GDP in the next five years, translating to around 15 percent a year.

Gansu, for example, said its economy will grow even faster than during the 11th Five-Year Plan period, when its GDP already more than doubled.

The problem is that most of China's GDP growth came from investment in infrastructure other than consumption. Consumption only accounts for about 35 percent of the economic growth. This is far lower than in developed countries such as Japan and the US.

Most provinces forecasting two-digit growth have ambitious infrastructure plans.

The southwestern province of Yunnan plans to start building 6,000 kilometers of railway, and vows that its 2020 economy will be three times that of 2010.

According to the aviation authority, in the next five years, the country's airports will grow from 175 to 220, and its fleet of aircraft from 2,600 to 5,000.

It is true that most of the two-digit growth plans are from inland provinces where infrastructure is not as complete as those of coastal areas, and where created jobs have longer-term viability.

It is easy for local governments to bombast about "economic restructuring" or "industrial update," but in reality, it is hard to hold back on growth and focus on fine-tuning the economy, especially in terms of quality of life which is hard to quantify.

Fortunately, the central government has made it clear that growing at the cost of damaging environment and inefficiency in energy use is no longer tolerable. Improving people's income and welfare and narrowing the wealth gap will be a hard but focused long-term goal for the country.


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