The most important investment under the 'new normal'
- By Kerry Brown
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E-mail China.org.cn, March 10, 2015
The NPC this year can partly act as a process of devising a new, clearer role for government. Markets, which are well regulated, need to increasingly set the prices for factors of production. Consumers need to replace fixed asset investment as the key driver of economic growth. And the service sector will rise, replacing manufacturing where prices are low and input costs rising, so that the urban, modernizing economy comes more quickly into existence. The government has to be the servant in all of this, withdrawing from some areas, but making sure before it does so that there are clear rules and regulations, and the system in place to implement these.
One of the tactically most important shifts we can see in this "new normal" paradigm outlined at this year's NPC is greater investment and shifting effort into human capital. Education and healthcare get special attention, as does improving China's environment. These are all critical for human development. They are also increasingly producers in their own right of better quality GDP.
Education will see 7.5 million new graduates in 2015. That will make up three quarters of the figure of new jobs that Premier Li promised would be created this year. In a short space of time, therefore, China is seeking to have one of the best educated young work forces in the world. Environmental protection means better technology, more investment in research, and more clean industry.
Healthcare too, with its extension to community centers available to 95 percent of the population, is also going to take up an increasing part of growth. As Premier Li stated some years before healthcare and social care are important contributors to GDP in their own right. But they obviously contribute to much more than just that.
The "new normal" in effect boils down to a "new economy." But the immediate issue is that, with the expectations of the public rising by the year and their demands becoming more complex, there is a big challenge in navigating from the era when it was just about growth based on physical assets and productivity alone, to the one where it is about quality based on humans. This is why the "political capital" that the government has put in the bank over the last few years, referred to in the opening paragraph, is so important. This is the investment that China's government now needs to draw on as it undertakes a difficult period of reform where a major Chinese paradigm shift is happening.
Kerry Brown is the executive director of China Studies Centre, and professor of Chinese politics, University of Sydney.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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