A view into China’s Development: Opportunities, Challenges, Actions

By Li Wei, President (Minister), Development Research Center of the State Council of China

shutterstock_chinaThe increasing economic integration and interdependence of countries around the world constitute the driving force behind common prosperity. In this pursuit, China, as the world’s second largest economy with an economic aggregate exceeding 15% of global GDP, plays a pivotal role. In fact, China’s development will, more or less, impact the development of other countries. So, what is China doing to realise its own domestic development goals that, in turn, can help spur a new round of prosperity for the global economy?

The way forward begins with understanding current realities. China indeed faces some unprecedented challenges. The working age population is in absolute decline as society is aging. Traditional industries, especially low value-added sectors, face serious over-capacity. Ecological and environmental problems challenge the country’s continuous development.

In spite of these challenges, China’s development has huge potential and tenacity. Consider that China’s urbanisation is far from complete, creating enormous room for growth now and well into the future. This will also require further harnessing industrialisation, expanding the country’s human capital and continuously promoting innovation. Even the current decline in China’s economic growth, which has fuelled extensive discussions globally, is only a temporary phenomenon, which many countries faced before. It is the inevitable result of economic restructuring, which sees a controllable slowing down, not a hard landing. With ongoing progress in structural and economic transformation, China’s economy is expected to achieve stable and sustained medium-high growth for its future development.

China articulated clear actions to unleash the country’s potential and promote economic transformation in its 13th Five-Year Plan. The plan establishes new patterns for innovative, coordinated, green and shared growth, guided by a continuous process of opening up to the rest of the world while deepening reforms at home. Five principles guide the plan:

First, innovation will drive development. Innovation breaks through constraints and bottlenecks to economic development. In the past, development was based on low labour costs, high resource consumption and high pollution emissions. Today, development relies on technological progress and innovation. That’s why China places scientific innovation at the heart of national development, and will continue to embrace opening up, deepening international co-operation and enhancing innovation capabilities to further the country’s economic development.

Second, sustainable development needs to be coordinated and regionally balanced. China has experienced uneven urban-rural development and an imbalance in economic and social development. Consider that urban per capita disposable income in 2015 was RMB 31,000, 2.8 times that of RMB 11,000 in rural areas. In terms of regional development, per capita GDP in Beijing in 2015 was RMB 106,000, 3.5 times that of RMB 30,000 in Guizhou, a less developed province in the southwest. The discrepancy in social development is significant too, with difficult access to education and medical care in some rural areas. To reverse these trends, China will work to strengthen development in the western and central regions, revitalise old industrial bases in the northeast, develop poor areas, and intensify efforts to balance urban and rural development.

Third, development must advance harmony between humankind and nature. Ecological and environmental protection is a priority for China as it promotes sustainable development. That’s why China is paying increasing attention to green growth. From 2000 to 2014, the world share of China’s installed capacity for renewable energy power generation increased from about 8% to 17%. China’s 13th Five-Year Plan sets forth ten obligatory targets, including reducing per unit GDP energy consumption by 15%, per unit GDP carbon dioxide emissions by 18%, total discharge of chemical oxygen demand by 10%, and total nitrogen oxide emissions by 15% within five years. Such efforts will make mountains greener, water clearer and the sky bluer in China.

Fourth, development and globalisation go hand-in-hand. Over the past 30 years, China has recognised the value of opening-up to and integrating with the global economy. The country has both gained from and added to the globalisation dividend. On the one hand, by opening up to the outside world, China has attracted foreign investment, introduced advanced technology and promoted modernisation. On the other hand, with its high quality and reasonably priced products, China offers other countries abundant options for consumer goods. Indeed, expanding consumption and investment demand provides broad business opportunities for the enterprises of other countries. Looking ahead, China will continue promoting economic globalisation.

Fifth, development must be shared by all. China’s motivation for sharing development benefits with all is not only because it is a socialist country. It also sees the enlightened lessons development promises. Sharing development achievements broadly means China will be able to provide a higher level and more equal public services by narrowing the gaps in income distribution. Towards this, the country’s current plan focuses on fully implementing a poverty-relief program to lift all 55.75 million rural people out of poverty by 2020.

Make no mistake about this: China has learned from the knowledge and experience of developed countries over the past 30 years. Now, guided by the five principles of a comprehensive economic and social development plan at home and committed to opening-up and integrating abroad, China will share its own knowledge and experiences with the rest of the world, while continuing to learn with a humble attitude. China’s historic decision to join the OECD’s Development Centre last year provides the perfect platform to share such knowledge and experience on development with other countries. In this way, China can actively contribute to a new round of global economic prosperity.