Zheng Xinli: Guidelines for a Decisive Victory in Building a Well-off Society

The 13th Five-Year Plan period is crucial to completing the building of a moderately prosperous society in all respects. The Suggestions for the 13th Five-Year Plan for National Economic and Social Development (hereinafter referred to as the Suggestions), as approved by the Fifth Plenum of the 18th CPC Central Committee, clearly outlines the guiding philosophy, basic principles, objectives and requirements, basic concepts and major initiatives of the 13th Five-Year Plan, thus drawing up a blueprint for China’s development in the next five years. To conscientiously study and implement the Suggestions is the fundamental guarantee for formulating and implementing the 13th Five-Year Plan and ensuring that our development is more balanced, inclusive and sustainable.

Stay focused on development, the top priority of our work

As China’s economy enters a new stage of development, it faces many new problems and challenges, such as mounting downward economic pressure, slow progress in industrial restructuring and upgrading, and unbearably tight constraints of the resources and the environment. Particularly, China is at a critical stage of its efforts to move from a middle-to-high income country to a high-income country. At present, China’s per capita GDP stands at about USD 7,800. According to the standard published by the World Bank, a per capita GDP of USD 12,000 is the threshold you have to cross to graduate from middle-income countries and join the ranks of high-income ones. International experience has shown that to increase the per capita GDP from USD 6-7,000 to 12,000 is ??an uphill battle for any country in the world, and most countries have became stagnant and fallen into the so-called “middle-income trap”, with only a few exceptions.

The key to leaping over the “middle-income trap” is to have the right development philosophy, seize valuable opportunities and undertake effective initiatives. The Suggestions underscores that development is the top priority of the Party in governing and rejuvenating the nation and we should focus on improving the quality and efficiency of development. It points out that China is still in a period in which we enjoy important strategic opportunities and have a lot to accomplish. It also puts forth a vision of innovative, coordinated, green, open and shared development which is of great practical importance for us in establishing the right guiding principles and mode of development, identifying the focal points of efforts, and completing the building of a moderately prosperous society in all respects on schedule.

Under the new situation with challenging tasks and problems, there must be new ideas, concepts and approaches for development. The five-word development concept put forward in the Suggestions is aimed to enhance the balanced, inclusive and sustainable development with new ideas, philosophies and approaches and ensure that Chinese society becomes moderately prosperous in all respects within the set time frame. Innovation must be adhered to and promoted in every field, from theory to institutions, science, technology, and culture. Innovation of institutions and mechanisms should be used as instruments to promote technology innovation and economic and social development.

 Science and technology and education systems should be reformed and improved to encourage enterprises to increase R&D investment and stimulate the enthusiasm of scientific researchers, and encourage mass innovation and entrepreneurship so that the technologies with independent intellectual property rights are used in transforming and upgrading industrial structure from resources and labor intensive to technology and knowledge intensive.

The coordinated development requires proper management of major relationships. From the national perspective, industrialization and urbanization in the coastal areas have entered the middle and later stages or post-industrialization stage, while most of the central and western regions still stay in the middle or early stage of that. Therefore, the focus of factor investment and development should be shifted to the central and western regions. The national sustainable economic development should be maintained through releasing the huge potential of development in the central and western regions. For green development, a civilized development path should be pursued that ensures high economic growth, rich livelihood and sound ecology, and accelerate the construction of a resource-saving and environment-friendly society.

Increasing high-quality ecological products should be provided through establishing the most strict environmental protection system and green, low-carbon and recycling industrial system to collaboratively advance the building of a wealthy, prosperous and beautiful China. In terms of opening-up and development, China should strive to promote reform and development through opening-up, achieve a higher-level open economy, and actively participate in global economic governance and public goods supply.

China should expand overseas investment, move forward with the Belt and Road Initiative, create more export demand, make better use of both domestic and international markets and resources, promote economic restructuring and upgrading, and enhance capacity for sustainable development. In terms of the shared development, China should make sure basic living needs are met, highlight the key points, improve the system and guide the expectation. Through increasing public service supply, fighting poverty, improving education quality, promoting employment and entrepreneurship and narrowing income gap, China should make sure that all people share the achievements of reform and development, and march together into the moderately prosperous society.

Accelerate the integration of urban and rural development

The gap between urban and rural development is the principal contradiction of China’s economic development at present. And the gap of regional development is in essence the gap between urban and rural development. The key of building a moderately prosperous society in all respects is to establish a urban and rural integrated development system, and speed up agriculture and rural development. At present, the urban-rural income ratio is about 2.9:1. It has become one of the biggest problems for building a moderately prosperous society that the income of rural residents, which is 45% of national population, remains at comparatively low level. At the same time, it is also the greatest potential for development. It has long been conceived that it is natural and reasonable for rural residents to have lower income during the fast process of industrialization and urbanization. However, the experiences of some countries have demonstrated that the income of rural and urban residents can enjoy synchronized increase as long positive measures are taken. In recent two years, a heartening phenomenon is the income of rural residents in some areas of China has outpaced that of urban residents thanks to timely policy measures.

The problem of the gap between urban and rural development can affect achievement of the moderately prosperous society and the long-term sustainable development of China's economy. Hence, President Xi Jinping has emphasized on the gradual realization of equal fundamental rights and interests for the rural and urban residents, equal basic public service in the rural and urban, a balanced income ratio between the rural and urban residents, rational allocation of production factors for the rural and urban, and integration of rural and urban industrial development. At present, the basic rights and interests of the urban and rural residents are not equal, which is embodied in the inequality of their property rights and the rights and interests with the household registration. Unlike the urban residents, the rural residents are not allowed to transact theirs houses in the market. Many migrant workers in the city, although having made great contributions to urban development for twenty or thirty years, are unable to obtain urban registration and enjoy the corresponding public services. The inequality in these two areas has significantly restricted the narrowing of income gap between rural and urban residents. The fact that the urban has long been the focus of public service investment has led to a huge gap between urban and rural public services, and thus restricting the development of rural economy and the improvement of the quality of rural residents. The production factors have been irrationally allocated between the rural and urban with the rural labor force, land, capital and other production factors constantly flowing into the city, while it has been difficult for technology, capital and high-quality labor force in the city to enter the rural areas. The Suggestions proposes targeted poverty alleviation, indicating that by 2020 all rural poverty population and counties under the current standard will be lifted out of poverty. The Suggestions also proposes to improve the integration mechanism of rural and urban development, promoting equal exchanges and rational allocation of production factors, and equalization of basic public services in the rural and urban. All these solutions will enable faster development of rural economy, faster narrowing of rural and urban differences, faster coordination of the rural and urban development.

Focus on increasing the supply of public services

At present, China is undergoing a process of transformation of consumption mode. The Chinese people are spending not only for living but also for enjoyment. However, the supply structure of consumer goods and public services has failed to adapt to this change. There have been excess supply and insufficient demand of consumer goods and production materials. While on public services, there has been a serious shortage of supply which falls short of general needs, including health care, education, pension, transportation, environment, water supply, domestic services, etc.. Moreover, there have been great differences in terms of the public service level between the rural and urban and among regions. The fundamental reason for the backwardness of public services lies in the sustained insufficient financial support at various government level and lack of the access mechanism for social capitals, which have inevitably led to unbalanced supply of consumer goods and public services. The significant differences of per capita public finance expenditure among regions have directly resulted in uneven development of public service. The achievement of a moderately prosperous society in an all-round way requires intensified investment in public service and increased supply on the one hand, and the equalization of basic public service by striving for an equal level of per capita public expenditure between the rural and urban and among regions. The Suggestions has offered some solutions to these problems, including intensifying the supply of public service, enhancing the joint building and sharing, improving the long-term mechanism of rural infrastructure investment and supporting the infrastructure construction in Western China. These important measures will help to upgrade the consumption structure and achieve a moderately prosperous society in all respects. The policy that allows all couples to have two children also proposed in the Suggestions will have far-reaching impact on optimizing the population age structure, solving population aging problems and expanding household consumption.

To strengthen the supply of public service, the investment system of public service facilities needs reforming and the government-enterprise cooperation model needs adopting during the 13th Five-Year Plan. The BOT, BT, PPP and other models can help investors recover their cost on time and get reasonable returns. Mobilization of social capitals into infrastructure and public service can help change the situation of shortage in public service supply.

Improve the ecological environment

The proposal of green development philosophy in the Suggestions serves the aspiration of the general public to improve the production and living environment. The economic benefits can’t be pursued at the expense of the ecological environment. In a moderately prosperous society in all respects, people should live with good physical and mental health in a clean, beautiful, comfortable and livable environment.

To achieve green development, the ambiguous perception should first be discarded that increased investment in environmental protection will inevitably affect the economic development. Improvement of the ecological environment should be regarded as an essential component of the development. The Decision adopted by the Third Plenary Session of the 18^th CPC Central Committee has mapped out the plan for construction of ecological civilization system. It requires adherence to the principles of pay for utilizing natural resources, contaminating environment and destroying ecology. And the practice of third-party pollution control is pursed. The Suggestions further points out that the fundamental system of pollution control should be reformed by establishing emissions permit system for all the enterprises with fixed pollution sources. In the past, the system was adopted that the polluters shall be responsible for the pollution control. However, the weak regulation has resulted in heavy cost for serious performers and increased profit for non-performers, and much more serious pollution. The above-mentioned new principles and system will help to ensure use of advanced equipments and technologies, smooth operation of pollution control facilities, and preventing such vicious illegal acts like secret emissions and disposals. It will also help establish effective mechanisms, and breed and expand the environmental protection industry. At the same time, the requirement that all enterprises shall adopt a single emission standard and play on even field will help offset the pollution control cost by intensifying internal management and improving technical progress. The Suggestions also proposes to establish and improve preliminary distribution system in terms of right to energy, water, sewage disposal and carbon emissions and supervise the enterprises in reducing the material consumption and emissions and disposals during their production. This will play an important role in the environment control and ecological improvement.