Economy

China's 12th Five-Year Plan signifies a new phase in growth

(Xinhua)
Updated: 2010-10-27 10:38

NEW YORK - China is looking toward creating a balanced economy not just allowing some people to get rich, but the entire country to prosper in a more even manner, a US scholar said in New York on Tuesday.

Professor Kay Shimizu of the Weatherhead East Asian Institute of Columbia University noted that the newly released 12th Five-Year Plan (2011-15) of China signified that China is ready to go on to the next phase in economic growth by storing wealth among its people and allowing the public share the fruits of reform and development.

"Deng Xiaoping said 'We should allow some people to get rich first, and the rest will follow.' Now it's time for the rest to follow, as the Chinese government has put it on the top agenda in the next five years," said Prof. Shimizu in an exclusive interview with Xinhua.

She said the most significant part of China's 12th Five-Year Plan (2011-15) is the focus shift from the export-led sectors to increasing domestic consumer demand by raising Chinese labors' incomes to allow all Chinese residents prosper in this new era.

"This is a significant change for China, and it also means bigger challenges. Income increase obviously will lead to labor cost increase, which is possible to impact export-led sectors as well as encourage high inflation. So an important task for China is to balance the inflation threats with increasing domestic demand while maintaining export-led sectors," she said.

The Fifth Plenum of the 17th CPC Central Committee, which was held in Beijing from Oct 15 to 18, adopted the "CPC Central Committee's Proposal for Formulating the 12th Five-Year Program for China's Economic and Social Development (2011-2015)."

The proposal said the 12th Five-Year Plan period was "a crucial stage for building a moderately prosperous society in an all- around way" and "a time of different issues for deepening the reform and opening-up process while accelerating the transformation of the nation's economic development pattern."

As an expert in China's domestic economy and political science, Shimizu is happy to find in the 12th Five-Year Plan (2011-15) that the Chinese government will focus more resources on rural areas and bridge the income divide between the urban and rural areas.

"The changes currently going on in the rural China are tremendous and under- reported, especially in the Western media, whose focus is always on the large cities like Beijing and Shanghai. Actually the changes in rural China are going to be the engine of China's economic growth in the next five or ten years, and of course China will face tremendous challenges. I think China is well-equipped to tackle them," she said.

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One of the measures that the Chinese government could do to mitigate the huge income gap, as she pointed out, is to gradually phase out the division between rural policies and urban polices, that is, to create similar opportunities outside big cities and move the concentrated resources out of the metropolitans.

"For example, large universities and research centers can be moved out of those big cities, so that not everything is concentrated in these areas. As a result, the migrant population will not always flow to big cities," she said.

Shimizu said given that the global economy recession continues and the global fight for social welfare increases, the role of the government in narrowing the income gap becomes more crucial. Therefore China should speed up forming a public service system and a public service-oriented government, which would lay the foundation for boosting domestic demand and sustainable development.

She also suggested that China should promote more technology innovation and more value-added products. A more frequent intellectual exchange between Chinese students and researchers are much more needed for making the value-added products going global.

"China has already made significant progress in the past years and great contributions to the world economy. So I don't think that future in the 12th Five-Year Plan is too far. It will not be too long for China to realize these goals," she added.