Meanwhile, greater investment in education, medical care and housing are equally essential. While many of China's neighboring countries offer free education and medical care to its nationals, we do not. In addition, the biased and single-minded marketization of the real estate industry has sent house prices sky-high, far beyond people's purchasing power. It requires more efforts to build low-rent and affordable houses.

To solve the above-mentioned problems, China needs to invest at least 1 trillion yuan each year during the 12th Five-Year Plan period.

Investment on social development and service is commonly believed to have no return, and thus it should only be made after people become rich. However, this is misleading. On the contrary, such investment can bring two direct social benefits.

Investment in social fields prompts development of correlated industries and thus helps to create a 20-years-some period of fast development and social stability. Good examples can be found in Europe and the US, while in comparison, Latin America experienced social unrest and stagnant economies due to insufficient social policies.

More social investment will also help to create some 100 million new jobs. To take Beijing as an example, every community in the city needs five to seven nurses for old people. The country may require 30 to 50 million more nurses for the old.

And China may need 30 to 50 million people working for charity.

To be frank, it's time for the government to switch its focus to social development. It requires the government to do research and to seek advice from people for policy-making.

In this crucial social transformation period, only social investment can help to solve social problems, provide greater stimulus for growth, and create sustainable economic and social harmony.

The author is head of Beijing Normal University 's One Foundation Community Research Institute. The Chinese version of this article can be found at China Development Observation magazine.