At a press conference held by the Press Center of the 17th National Congress of the Communist Party of China (CPC) at Beijing Media Center on October 18, Zhu Zhixin, Vice Minister of the National Development and Reform Commission, briefed journalists from home and abroad on China’s economic and social development and answered their questions. More than 230 Chinese and foreign journalists attended the press conference, hosted by Li Bing, Spokesman of the 17th CPC National Congress.

Rapid Economic Growth and Further Improvement of People’s Living Standards

Two impressive features have marked China’s economic and social development since the 16th CPC National Congress in 2002, Zhu said.

The first is the promotion of sound and rapid development of the national economy in accordance with the scientific outlook on development. While China’s economy grew rapidly in aggregate terms, the quality and efficiency of its economic development also improved. From 2003 to 2006, the national economy grew by 10.4 percent annually on average, much higher than the world average of 4.9 percent in the same period. These years have been periods of rapid, stable economic growth and high economic efficiency since the founding of the People’s Republic of China in 1949.

The second is the promotion of social harmony with a strong focus on people’s livelihoods. The CPC Central Committee has put forward its major strategic task of building a harmonious socialist society. People’s living standards have been further improved, because the CPC Central Committee has been resolving specific problems that are of the utmost and immediate concern to the people. The per-capita disposable income of urban residents reached over 11,759 yuan in 2006, marking an average annual growth of 9.2 percent in real terms since 2003. The per-capita income of farmers hit 3,587 yuan, with an average annual growth of 6.2 percent. Fresh progress has been made in social services such as science and technology, education, culture, public health, sports and publishing. 

Overall Price Hike Unlikely in the Long Run

When asked about current price levels and whether the country has entered a period of inflation, Zhu said that the rising consumer price index (CPI) is not synonymous with inflation. The current round of price hikes has mainly resulted from the considerable rise in the price of agricultural products, especially food, he said. Statistics show that in the first eight months of the year, the CPI had risen 3.9 percent, 3.3 percentage points of which were caused by an increase in food prices. Given the cyclical nature of agricultural production, the CPI may remain high for some time, but an overall price hike is unlikely in the long run, he said.

Domestically, the supply of most industrial consumer goods outweighs their demand. China has reaped a bumper grain harvest for the third consecutive year, with its summer crops and early rice enjoying another good harvest, and autumn crops hopefully doing the same this year. At present, there is an adequate storage of grain and grain prices have tended to stabilize, crucial conditions for keeping the CPI stable. All major countries face rising consumer prices fueled by the considerable increases in food prices due to increasing prices for agricultural products in international markets. Along with the rise of food prices and the expansion of food production, major corn and soybean exporters are devoting more farmland to growing these crops. As a result, the world’s grain output is expected to remain relatively stable. An ancient Chinese saying goes, “A rise in grain prices leads to a rise in the prices of all products.” As long as grain prices are stabilized, overall price levels will be stabilized. China will take comprehensive measures to rein in the soaring prices and prevent its rapidly growing economy from becoming overheated, Zhu said.

Development, Reform and Income Regulation Crucial to Bridge the Wealth Gap

In response to a question on China’s income gap, Zhu said the gap is widening. However, it should be noted that Chinese people’s income has increased by varying degrees along with China’s economic and social development since the country adopted its reform and opening-up policy in the late 1970s. The income gap has resulted from a variety of causes, such as the disparities between urban and rural areas and the defects of the income distribution system, Zhu said. International experience shows that a country’s income gap tends to widen at a certain historical stage where industrialization and urbanization speed up, he said. The income distribution gap among Chinese citizens has emerged as they seek common prosperity. These “growing pains” are a problem that plagues them as they forge ahead. The government has taken a series of measures to tackle the problem, he said.

Efforts to resolve the income distribution problem first of all hinge on development. China should implement the scientific outlook on development to achieve sound and rapid development, make the pie bigger and divide it reasonably. Reform also has a great bearing on income distribution. China should deepen its reforms, including the reform of the income distribution system. Most importantly, China should improve its distribution system so that income distribution based on one’s work remains the predominant mode and coexists with various other modes. At the same time, the reforms should create an institutional environment with equal opportunities, equal rules and equal processes. Regulation is another crucial factor. The government should raise the income of low-income people, increase the number of middle-income people, regulate excessively high incomes, protect lawful incomes and ban illegal incomes.

Economy Not Overheated

When asked if China’s economy is overheating, Zhu said the economic situation has generally been good since the beginning of this year. The basic feature that China’s economy has maintained stable and rapid growth for several consecutive years has not changed, he said. But problems in China’s economy remain prominent. For example, the tendency of the rapidly growing economy to overheat has not been checked. Given the accumulation of unstable, unhealthy, unbalanced and unsustainable factors, potential risks are not to be underestimated, he warned.

While being aware of the risk of economic overheating, Zhu said he did not think it was proper to conclude that China’s economy is overheating in a comprehensive manner. He gave the following reasons: First, both economic overheating and stagnation indicate aggregate imbalances. However, there is largely a balance between aggregate supply and aggregate demand in China today. Second, the aggregate balance is illustrated by the fact that there is no severe inflation or comprehensive, lasting and considerable price hikes caused by aggregate demand greatly exceeding aggregate supply. Third, supporting conditions for economic growth have improved notably, as evidence of balanced aggregate economic relations. Supplies of coal, power and oil and transportation services are not strained overall. Even though China’s economy is not overheating in a comprehensive manner, Zhu rejected blind optimism. He said China would pay close attention to the hidden risks in its national economy, especially the risk of economic overheating and the pressure of inflation. It will never slacken its efforts to respond to new situations with timely solutions, he said.

A Better Reflection of China’s Realities

In his report to the 17th CPC National Congress, Hu Jintao, General Secretary of the CPC Central Committee, mentioned the “transformation of the mode of economic development,” which was different from the previous notion of “transformation of the mode of economic growth.” 

In response to a question about the implications of the word change from “growth” to “development,” Zhu said that the change from the “transformation of the mode of economic growth” to the “transformation of the mode of economic development” is not just a change in wording, but shows that the CPC’s understanding of China’s economic development is deepening. 

First, the notion of “transformation of the mode of economic growth” better reflects the requirements of applying the scientific outlook on development. The “mode of economic growth” mainly involves the inputs and outputs of economic growth. The “mode of economic development” is more substantive and comprehensive. Economic development not only includes economic growth, but also calls for optimizing the structure, improving the efficiency of resource usage, improving the ecological environment and achieving growth on this basis. The “mode of economic development” underlines the efficiency of economic growth, optimized economic structure, balance between economic growth and the natural environment and the reasonable distribution of economic benefits. The replacement of the word “growth” with “development” helps build consensus on development and on the scientific outlook on development.

Second, the notion of “transformation of the mode of economic development” better reflects the requirements of developing the socialist market economy. The replacement of “growth” with “development” helps distinguish the roles of the government and the market. In the socialist market economy, the role of the market in allocating resources should be brought into full play. The government, for its part, should take the initiative in guiding market forces. It should devise plans, formulate policies, make investments, conduct macro-control and deepen reforms in order to expand domestic demand, optimize the economic structure and enhance the country’s capacity for independent innovation, thereby promoting sound and rapid economic development. 

Third, the notion of “transformation of the mode of economic development” better reflects the requirements of resolving the most compelling problems. Attempts to change the mode of economic growth is likely to go nowhere unless efforts are made to adjust the economic structure and the demand structure, enhance the country’s capacity for independent innovation and make consumers’ demand, the development of the service sector and technological progress a stronger driving force for economic growth. The replacement of “growth” with “development” aims to better reflect the features of China’s current economic development.

Stronger Commitment to the Environment

In response to a question about China’s energy conservation and pollutant discharge reduction measures, Zhu said efforts to save energy and lower pollutant discharge are essential to the adjustment of the economic structure and the transformation of the mode of economic development. China will not change its preset goal, which seems to be difficult to achieve, he said, adding that it will double its efforts in this regard with unwavering determination and responsibility. 

This year, the State Council issued a comprehensive action plan on energy conservation and pollutant discharge reduction, which put forward 45 measures on 10 aspects, a vigorous effort on behalf of the government. The move shows that China’s efforts to promote energy conservation and pollutant discharge reduction are growing stronger, Zhu said. As policies and measures are put into practice, these efforts will bear more fruits, he said. 

Last year, China’s energy consumption per unit of GDP dropped by 1.33 percent for the first time since 2003. It went down by 2.78 percent in the first half of this year compared with the same period last year. By that time, it had declined four consecutive quarters.

Several factors are crucial to the success of energy conservation and pollutant discharge reduction. These are adjusting the industrial structure, promoting technological progress, improving management and involving the general public, Zhu said. For example, China has stepped up efforts to eliminate outdated production capacities in accordance with the principle of “fostering large enterprises and restricting small ones.” It has devised annual outdated production capacity reduction plans for 13 industries in different regions. In the first half of the year, China eliminated 11.4 million tons of iron melting capacity and 8.7 million tons of steel production capacity. The targets set for this year are likely to be met. By the end of September, China had shut down small coal-fired power generation units with a generation capacity of more than 9 million kilowatts. The target for the whole year—10 million kilowatts—is on track.

(China.org.cn)