One week before the much-anticipated plenary session of China’s leadership, senior officials, retired reformers, academics and UN staff have flocked to China’s southern island province of Hainan to discuss what reforms China will map out.
They gathered on Friday in Haikou, capital city of Hainan, for the opening of the 2013 Emerging Economies Economic Policy Forum on "Growth, Transformation and Reform — Emerging Economies in the Next Decade." There was one topic on everybody’s lips.
Chi Fulin, president of the Haikou-based China Institute for Reform and Development, said the substantial transformation of growth mode will be a major test for the future reforms and that is why people are expecting important reform information from the upcoming Third Plenary Session of the 18th Communist Party of China (CPC) Central Committee.
Chi said that China’s investment-driven growth mode has become difficult to sustain.
"It is not only because of the shrinking U.S. and European markets and the decreasing investment efficiency," said Chi, "but more importantly because the investment-driven mode has regarded enlarging the size of the economy as the purpose of investment, thus leading to a serious imbalance between investment and consumption, and overall, long-term overcapacity."
He also said, "The key to successful economic transformation through reforms lies in strengthening the relationship between the government and the market in an attempt to stimulate market vitality."
As for the growth mode being driven by local government competition, Chi said it has gradually evolved into a defining factor for growth but also the root of overcapacity, the property bubble and local government debt, although it was originally designed to inspire local governments’ initiative.
He suggested that a central-local taxation and fiscal system be established to provide better public services and called for reforms to change farmland contract rights into real rights and to constrain local governments’ behavior.
Peng Sen, vice chairman of the Financial and Economic Committee of the National People’s Congress, China’s top legislature, echoed Chi by saying that China’s economic growth can no longer rely on investment and exports.
As the world’s largest emerging economy, China’s growth rate has been slowing. "It is not a matter of decelerating but of changing gears like in driving," he said, expressing hope that China can keep the current increase rate, around seven percent, for another five to 10 years.
Official data showed that the growth of China’s gross domestic product (GDP) eased to 7.7 percent in the first three quarters of the year, down from a two-digit growth pace logged over the past decade.
"With less than a 12-percent contribution to the world’s GDP, China’s energy consumption, however, almost halves that of the world’s," said Peng.
"Transformation is a must, though painful," he said. "But the arduous task can only be completed by reform and innovation."
He listed several priorities including the relationship between the government and market forces, a review of the tax distribution system that has been in practice for nearly two decades, and the dualization of rural and urban governance that has led to an increasing gap between farmers and urbanites.
"China is quite an unusual country in the sense that it’s been able to change its model quite frequently. When that model started to have problems, a new one was introduced," said Richard Herd, chief China economist at the Organization for Economic Cooperation and Development.
Herd advocated that China address financial deregulation and capital opening, migrant labor, national social security, excessive central control over local spending, land reform, pollution control and social reforms.
"We wait for next week," said Herd. Endi
Editorial Message
This site contains materials from other clearly stated media sources for the purpose of discussion stimulation and content enrichment among our members only. does not necessarily endorse their views or the accuracy of their content. For copyright infringement issues please contact