By Zhang Junkuo & Hou Yongzhi, Department of Development Strategy and Regional Economy, Development Research Center (DRC)

Research Report No 036, 2010

I. Goals and Requirements for Accelerating Change of Economic Development Mode

The character and features of a proper mode of development are changeable and are highly relevant to the stage of development and the environment for development. In other words, the mode of development has no ultimate form. In different stages and different environments, industrialization and urbanization have different primary tasks and also different impetuses, paths and tools. For example, in the primary stage of industrialization, accelerated development is generally the primary task and increased material capital accumulation is generally the main leverage to promote development. In the advanced stage of industrialization, however, better development is generally the primary task and technological innovation and human capital accumulation are generally the main leverages to promote development. Therefore, the mode of development we are trying to shape should be consistent with the process of China's industrialization and urbanization and in conformity with the internal and external environments of China's modernization. In short, it should be a mode of development that is comprehensive, coordinated, highly efficient, universally beneficial, sustainable and highly adaptable.

1. Goals at different phases

At present, China's mode of economic development is fraught with prominent contradictions and problems, which have seriously affected the steady performance of the economy at the moment and also constituted a potential threat to sustained economic development in the future. For this reason, changing the mode of development has become a major pressing task. On the other hand, the change of the mode of economic development has wide-ranging contents. And as different contents and different areas are inter-related and mutually restrained, the change of the mode of economic development is a difficult system integration endeavor. When we change the mode of development, we must consider both necessity and possibility and we must have a sense of urgency and avoid undue haste. By analyzing the nature and seriousness of the contradictions and problems associated with the mode of development and also the factors and their intensity affecting the change of the mode of development, we believe that a substantial change of the mode of development should be pursued in two phases.

The first phase runs from now to the end of the 12th five-year plan. In this phase, China must emphasize key areas and focus on the elimination of the profound system factors that restrain the change of the mode of development. At the same time, it should establish systems and mechanisms to support scientific development so as to make substantial progress in changing the mode of development. By so doing, the prominent contradictions associated with the mode of development can be visibly eased, and the mode of development will become more compatible with China's national conditions and more adapted with the requirements of the new stage of development. This will lay a solid foundation for realizing a fundamental change of the mode of development during the next five-year plan.

The second phase runs from 2015 to 2020. By overall arrangement and unified promotion, China should further improve systems and mechanisms so as to fundamentally eliminate the system and policy factors that impede scientific development and should form a mode of economic development in conformity with China's development stage and its internal and external environments. This mode of development must be comprehensive, coordinated, highly efficient, universally beneficial, sustainable and highly adaptable.

2. Concrete requirements

(1) It must reflect the requirement of comprehensive development. In the new stage of the new age, China's modernization should be one that features comprehensive development, including human development, instead of the past modernization that overemphasized economic development. The new mode of development we are trying to establish should help pursue comprehensive progress in economic construction, political construction, cultural construction, social construction and ecological construction.

(2) It must reflect the demand of coordinated development. All aspects of modernization constitute an organic whole. Only when all aspects develop in a coordinated manner can modernization advance in a sustained way. Not only all the aspects of modernization should develop in a coordinated way, but also the different parts of each aspect should do in the same way. The new mode of development should help optimize the internal structure of the economy and coordinate the development between economy and society and between economy and nature.

(3) It must reflect the requirement of highly efficient development. Highly efficient development refers to the development that can yield more outputs under the same restraining conditions. It not only helps accelerate development but also helps increase the sustainability of development. Highly efficient economic development is determined by China's basic national conditions that its per capita natural endowment is low and it has yet to complete industrialization and urbanization. It is also determined by the basic trend that international competition for global resources will become ever fiercer for a considerable time to come. If China is to achieve highly efficient development, it must work hard to boost the utilization efficiency of natural resources, capital and human capital. Meanwhile, the new mode of development must help optimize the allocation of resources and factors between different sectors and regions and between urban and rural areas so as to enhance the efficiency of resource allocation.

(4) It must reflect the requirement of universal benefit. Today after China has implemented the policy of allowing some people to get rich first through honest labor and legal operation for decades, allowing all people to share development fruit has become a consensus of whole society. This is not only a requirement to meet the people's new expectations, but also an inevitable requirement to promote harmonious coexistence between various social classes, expand domestic demand, release development potentials and maintain development continuity. The new mode of development must help all regions and classes to share development fruit.

(5) It must reflect the requirement of sustainable development. Development sustainability is vitally important to a country's modernization. The history of international economic development indicates that the huge north-south development gap in the world today is not mainly because the countries in the north have been faster than their southern counterparts in development speed. Instead, it is mainly because the countries in the north has maintained economic growth for over a century, while those in the south have failed to achieve sustained economic growth due to external invasion and internal social turmoil. Today, the Chinese people have had enough to eat and wear and their overall living standard has reached a moderately wealthy level. So maintaining economic sustainability has become an overriding task for China to realize modernization in the new age. This means that development must be maintained within the tolerance of resources and the environment and that development should acquire lasting impetus through continuous technological advance and innovation.

(6) It must have sufficient adaptability. The mode of development is a product under certain historical and technological conditions. When conditions have changed, the mode of development must also change accordingly. Otherwise, a series of economic and social problems will appear. This has been proved not only by China's development history but also by the development history of other countries. The new mode of development must be able to adjust and optimize itself in light of the changes to the internal and external conditions and to the environment.

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