Blueprint and timetable for future

A successful transformation into a consumption-led society will aid China's economic growth for a longer period, which in return will further facilitate its higher-level transformation and reforms. To accelerate this process, China should draft a timetable for the building of a consumption-dominated economic model as soon as possible. For example, it should take practicable measures to raise its final consumption from the current 49 percent of gross domestic product to more than 60 percent by 2020, and it should make consumption an intrinsic driving force of national economic growth.

At the same time, the country should also map out a strategy to release domestic consumption and push for adjustments in its investment and State capital strategies.

China should regard the releasing of its domestic demand through urbanization and institutional innovations as a strategic focus of its efforts to build a well-off society and promote equitable and sustainable development. This requires bigger steps be taken to build a new urbanization pattern, one in which migrant workers become urban residents.

As a way of doubling the incomes of urban and rural residents from the 2010 level by 2020, China should first create conditions for the incomes of the middle-income group to grow, which will help maintain social stability and boost domestic demand. The considerable rise in their incomes will not only facilitate China's economic and social transformation and reforms, it will also be beneficial to coordinating relations between different interest groups. An expanded middle-income group will also help form a consensus within society on reforms and boost national confidence in the reforms.

China should expand the middle-income group from the current 23 percent of the population to 40 percent of the population by 2020, which would mean a middle-income population of 600 million. To cultivate the expansion of this group, China should accelerate its long-anticipated income distribution reforms.

To realize its development potential, China should also change the current government-led growth model, reduce the government's presence in economic activities and push forward necessary market reforms, such as resources pricing and its established fiscal and taxation systems.

Experience indicates that deepening reforms in some key areas will face huge obstacles and challenges. To keep reform on track, the country should design and layout reforms at the top level, drafting an unequivocal blueprint and timetable for reforms in the years ahead. To facilitate such reforms, a top-level reform coordination agency should be set up as early as possible.

The author is president of the China Institute for Reform and Development based in Hainan province.

(China Daily 02/28/2013 page8)