Inclusive growth, a development perspective in China
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The concept of inclusive growth may not mean much for ordinary people, but for some economists looking ahead, it promises a new strategy for China's future development.
The concept was first created and advocated by Asian Development Bank (ADB) economists in 2007. Recent remarks by Chinese President Hu Jintao on inclusive growth have triggered speculation that Chinese policy makers were refining their perspective on development to include this concept.
According to Hu, inclusive growth means to spread the benefits of economic globalization and development among all countries, regions and people and to realize balanced economic and social progress through sustainable development.
As China gears up for the Fifth Plenary Session of the 17th Central Committee of the Communist Party of China -- it will discuss proposals for the country's 12th Five-year Plan (2011-2015) and the term "inclusive growth" is expected to become the new buzzword and is likely to be written into the Plan, said Zuo Xiaolei, chief economist at China Galaxy Securities.
The plenary session is scheduled to run from Oct. 15 to 18 in Beijing.
"Inclusive growth is a new idea that will help China tackle emerging challenges, which is also very crucial to the future direction of the country's development," Zuo said.
During the past three decades, China's economy has witnessed an amazing boom, in line with the policy initiated by the late Chinese leader Deng Xiaoping, of allowing certain regions and groups of people to become prosperous first.
The country's astounding economic growth, however, hides a series of problems. The most obvious is that, there is a significant difference in the outlook of various regions and the livelihoods of their population.
According to a World Bank report, the Gini coefficient for China, a main gauge of income disparity, surged to 0.47 in 2009, exceeding the warning line of 0.4. The figure was 0.21-0.27 three decades ago.
"The emerging problems make fostering inclusive growth an issue of practical significance for China as the idea seeks to ensure equal access to opportunities and balances economic and social development with environmental costs," said Wang Jun, a researcher with the China Center for International Economic Exchanges.
One key tenet of inclusive growth is sharing, which means to let people share the fruits of economic development in a just and fair manner, Zuo said.
In the domestic context, inclusive growth means a country's economic and social development should guarantee a higher living standard for its people while not imposing serious damages on the environment, Wang said.
He said the term also meant that a country's growth should not restrict or hinder the development of other countries.
China's policy makers have realized that the traditional development pattern, which greatly relied on exports and investment, is no longer sustainable, analysts said. China's macroeconomic regulation in the next five years would focus on transforming economic growth patterns and adjusting economic structures, while inclusive growth would play an important role during the process, they said.
Wang Tao, an economist with UBS Securities, expected Chinese policy makers to announce a lower medium-term GDP growth target and emphasize structural changes in the 12th Five-year Plan.
"As a sign that the government will now pay more attention to structural changes and the quality of growth, we think the annual growth target in the 12th Five-year Plan may be lowered to 7 percent from 7.5 percent in the 11th Five-year Plan," she said in an emailed note to clients.
To bring about these structural changes, China must turn to a growth model driven by technological progress, higher production efficiency and a reformed income distribution mechanism, said ADB chief economist Zhuang Jian.
As President Hu said while addressing the opening ceremony of the Fifth APEC Human Resources Development Ministerial Meeting: "To realize inclusive growth, to resolve the social issues emerging from economic development and to lay a solid social foundation for trade promotion, investment facilitation and long-term economic development are all major topics that we, the APEC member economies, need to work on together."
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