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| Growth Mode Change Tough But Necessary |
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After much talk of the need to change the current extensive growth mode, it is now time to face economic reality. China's new five-year development blueprint has now been made available across the country, only a few days after it was officially approved by the National People's Congress last week. Such a prompt publication of the country's 11th Five-Year Guidelines (2006-10) is obviously meant to drive home the message as soon as possible. By introducing environmental cost and energy intensity into measurement of economic progress for the first time, the new development blueprint has clearly manifested the central government's resolution to pursue growth in an economically and socially sustainable way. Yet, the merit of the new five-year program will rest on its implementation. And the time left for the national economy to embark on the necessary change of growth mode is very, very limited. This year marks a starting point. A good start will be crucial to the success of the nation's new development strategy. However, the latest economic figures do no help. The country's consumer prices in February rose at the slowest pace in five months while trade surplus shrank to the smallest since August 2004. Official statistics indicate that the consumer price index, a key inflation measurement, rose only 0.9 percent year-on-year last month. Though trade volume kept soaring, faster import growth has sharply cut the trade surplus from US$9.56 billion in January to US$2.45 billion in February. Admittedly, for seasonal reasons, such monthly figures alone do not necessarily reflect the annual growth trend in consumption and trade. Nevertheless, there are worrying long-term signals. A recent survey by the People's Bank of China shows that the willingness of urban residents to consume more fell to a record low after declining for three consecutive quarters. It implies that while insisting on the need to save more for future uncertainties like education, Chinese consumers become less keen on buying houses and cars. In the mean time, protectionist mutterings are becoming increasingly loud on both sides of the Atlantic. The European Union's anti-dumping charge against Chinese shoes and some US congressmen's threat to impose a 27.5 percent tariff on all Chinese imports are the stuff of nonsense. But they indeed bode ill for China's trade growth. If consumption and trade, two of the Chinese economy's three growth engines, lose steam, it is hard to imagine that local officials can resist the temptation of investment expansion. The difficulties of stimulating domestic consumption and sustaining rapid trade growth have made investing more an easy option for many local officials to maintain economic growth. But for the country, another round of unchecked investment growth is no longer affordable. To facilitate the change of growth mode to an environmentally-friendly, energy-efficient one, we must stop falling back on extensive investment. The present economic conditions have made it an uncomfortable time to start shifting away from the old growth pattern. The policy-makers have to balance the speed of economic development and a change of substance of growth mode, which will test their commitment to earnestly carrying out the new national development strategy. It is a difficult balancing act, but priority should be given to the immediate change of growth mode for the long-term interests of the country. (China Daily March 20, 2006) |
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