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Print Edition> Nation
UPDATED: January 27, 2011 NO. 5 FEBRUARY 3, 2011
Mapping Out a Future
Local governments pledge to improve living standards for residents

Many other local governments, including those of Shaanxi, Henan and Zhejiang provinces and Tibet, Inner Mongolia and Guangxi Zhuang autonomous regions also focused on people's standards of living, citing extra efforts to increase investment in education, arrange employment, improve the social security system and provide more affordable housing.

All these measures were of vital importance to fulfilling commitments of the ruling party and the government in solving the income distribution problem, said Zhang Chewei, Deputy Director of the Institute of Population and Labor Economics of the Chinese Academy of Social Sciences.

The National Bureau of Statistics (NBS) said on January 20 that China's GDP hit 39.79 trillion yuan ($5.83 trillion) last year, up 10.3 percent year on year calculating at comparable prices.

Experts said China, with per-capita GDP surpassing $4,000, had reached the middle-income stage in development.

As proven by experiences of other economies around the world, at this stage, China also faces the challenge of a growing gap between the rich and the poor.

The income distribution system will be improved, especially for residents with middle and relatively low salaries, to expand their consumption capacity, according to a proposal of the Central Committee of the Communist Party of China on China's 12th Five-Year Program (2011-15) for National Social and Economic Development. The program is expected to be finalized at the annual NPC session in March.

Further, local governments should properly handle relations with local businesses and workers for income distribution reform, said Zhang, hoping that the government would carry out the people-first principle and shake off interference from local interests.

"The next 10 years are a critical phase to test whether China can successfully overcome the 'middle-income trap'," said Yang Yiyong, head of the Social Development Research Institute with the National Development and Reform Commission (NDRC).

Changing growth pattern

"During the 2011-15 period, Tianjin will intensify efforts to transform its growth pattern and arrange its agriculture, industry and service industry more reasonably," said Tianjin Mayor Huang Xingguo in his government work report delivered at the full session of the local people's congress.

According to Beijing's development blueprint, the city will focus more on the development of its tertiary industry in the future.

"We will strive to develop tourism this year and to build the city into an international business center," Guo said in his government work report.

Despite positive signs alike, Vice Chairman He of the NPC Financial and Economic Affairs Committee is critical of many regions having taken "doubling the current GDP" as their goal in the next five years.

"When growth is prioritized, local authorities tend to push GDP growth rates up with high levels of investment, resulting in risks to our economy," said He. He called on local governments to shift attention to economic restructuring.

"The trend of regions pursuing high GDP growth figures continues. I am worried about the risks," said Wang Yiming, Deputy Director of the Academy of Macroeconomic Research of the NDRC.

Wang urged for more effort to boost innovation and productivity, which have seen no progress in recent years.

Reducing environmental problems and boosting energy efficiency also slow the GDP growth pace, said Wang, citing pressure on China to keep its annual energy consumption below 4 billion tons of standard coal in 2020.

An economy that grows too fast is difficult to transform, especially when the growth is driven by investment, Wang said.

"When you aim for a fast growth rate, the goal of curbing excessive investment is hard to achieve," he said.

NBS Commissioner Ma Jiantang said China would step up efforts to accelerate the transformation of the country's economic growth pattern, something the country has been working hard to achieve in past years.

China is striving to reduce reliance on exports and investment and boost domestic consumption to provide more sustainable economic momentum in the wake of the global crisis.

The NBS data show consumer spending contributed 3.9 percent to the country's 10.3-percent GDP growth last year, while investment accounted for 5.6 percent and exports for 0.8 percent.

China's retail sales rose 18.4 percent year on year to 15.4554 trillion yuan ($2.26 trillion) in 2010, according to the NBS.

Yao Jingyuan, chief economist with the NBS, said China would work to keep economic growth at a stable level this year, which could leave room for the government to boost economic restructuring and control price levels.

More efforts would be put into reform of income distribution, development of strategic emerging industries and the tertiary sector, as well as energy conservation and emissions reduction, he said.

"For China, 2011 will be a year of opportunities and hope, and a year of transformation and reform," said Commissioner Ma.

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