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Print Edition> Business
UPDATED: February 4, 2013 NO. 6 FEBRUARY 7, 2013
Ambitious and Practical

Third, the difficulty of realizing the "income doubling" plan increases against the background of growth model change in China. According to the report to the 18th CPC National Congress, the precondition for the plan is that "major progress should be made in changing the growth model and China's development should be much more balanced, coordinated and sustainable." Although the new development model will benefit economic growth in the long term and increase its sustainability, economic growth will have to slow down during the transformation in the short term. In addition, between 1979 and 2011 China's average annual economic growth and growth of resident income were 9.9 percent and 7.4 percent, respectively. If the ratio between the two figures stays the same, and GDP grows by 6.86 percent annually for the next eight years, the annual growth for resident income will only be 5.1 percent, falling short of the 6.5 percent growth needed to double income. Therefore, much effort must be put into adjusting the income distribution between state, enterprises and residents.

Fourth, problems surrounding the current institutions and mechanisms are still hurdles to development in a scientific way. The governance system, fiscal and taxation system, financial system and mechanisms on scientific and technological innovation are yet to be improved and finely tuned.

Fifth, China faces a rise of economic and social challenges as its economy transitions, including an underdeveloped labor market, widening wealth disparities, deficient social security systems, education inequality, environmental pollution and looming financial risks.

But the "income doubling" goal is attainable as China still enjoys a window of opportunity.

The overall international environment is favorable for China's economic and social development. Peace, development and cooperation remain the trends of our times. Since the outbreak of the international financial crisis, the changes to the international political and economic structure have improved the international environment for China's development and have created new opportunities. Theoretical and technological innovations worldwide have shown great prospects.

Domestically, China's economy still has enormous potential and room for growth.

First, China has political stability and a clear-cut roadmap for development with the election of a new top leadership at the 18th CPC National Congress. This eliminates the possibility of detours in future development.

Second, China's economic development is still at a primary stage. Accelerating urbanization, integration of IT application, industrialization and agricultural modernization will all inject new vigor into its economic growth. Continuous improvement of the residential spending structure, development of infrastructure, and implementation of ecological protection and social welfare programs will also unleash huge potential for growth.

Third, China's rapid economic growth over the last three decades has laid a sound foundation for future development. China is now the second largest economy in the world, with the globally largest manufacturing added value, foreign reserves and volume of exports of goods. China also ranks top in grain output and many other agricultural products. China is the largest producer of more than 200 varieties of major industrial products. Moreover, recent years have witnessed significant progress in China's transportation and telecommunications infrastructure as well as municipal facilities and water resources projects. China's research and development level and number of qualified research personnel are both higher than ever.

Lastly, our confidence comes partly from the recent successes in economic development. For the last decade, China's average annual growth rates for GDP and resident income were 10.7 percent and 8.5 percent, respectively.

Email us at: yaobin@bjreview.com

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