Having persevered amid the trials of the financial crisis, the Chinese economy has arrived at the crossroads. As the country looks for more sustainable growth, the issue of economic rebalancing and structural adjustment takes center stage. During the third sessions of the 11th National People's Congress (NPC) and the 11th Chinese People's Political Consultative Conference (CPPCC), NPC deputies and CPPCC members sat down with Beijing Review reporters Hu Yue and Yuan Yuan to share their opinions and suggestions for economic restructuring. Edited excerpts follow:
Tapping the Rural Market
Zhang Jiasheng: deputy to the 11th NPC and Secretary of the Huangcheng Village Committee of the Communist Party of China (CPC), Yangcheng County, Shanxi Province
Since China started setting itself up to rely more on domestic demands, consumption is taking center stage as a powerful growth engine. The rural consumer market, in particular, is a bonanza yet to be fully explored. With their incomes on the rise, many Chinese farmers are less hesitant to spend.
Early last year the country started a program to subsidize rural purchases of home appliances. This has effectively sparked a buying interest among farmers and improved their standards of living.
But it is just a matter of time before the government withdraws the incentives, so a more permanent solution is to improve rural transportation and increase retail outlets to make it more convenient and less costly for farmers to go shopping. Efforts are also needed to support rural employment, and increase farmers' incomes, pensions and other social benefits. It is also imperative to take measures and protect them from shoddy or fake products.
Rapid extraction of coal has left Shanxi Province with serious environmental damages, and it is time now to heal the scars. Huangcheng Village, for instance, is now basking in the glow of a local tourism boom and modern agricultural take-off. Per-capita net income of the villagers was around 30,000 yuan ($4,393) in 2009, well above the national average.
The province's coal dependence will surely defy a quick fix, but at least we can adopt advanced technologies that help cut emissions and improve energy efficiency. It is also an improvement to develop the coal chemical industry and increase added value to the resources.
West China Catches Up
Wang Xiaolin: deputy to the 11th NPC and General Manager of Chongqing Shangchu Logistics Co. Ltd.
The western regions of China have made remarkable economic progress in the past decade, but they still have a long way to go before catching up with east coastal provinces in part due to a shaky manufacturing foundation.
Currently, the nationwide economic restructuring offers an opportunity for west China to pick up momentum. Many manufacturers, from home and abroad, are moving westward in order to take advantage of lower costs of land and labor. This is bound to breathe fresh life into the inland economies and shore up local employment. For example, PC giant Hewlett Packard built a production base in Chongqing in August 2009, creating at least 10,000 jobs annually for the city.
Governments of western provinces should offer more policy incentives to attract coastal enterprises, such as tax breaks and easier access to financing. It is also necessary to accelerate infrastructure improvements, such as transportation system and power grid. Despite its proximity to the Three Gorges Power Station, Chongqing is coming under the growing pressure of power shortages.
The widening urban-rural gap is another challenge facing Chongqing, so it is urgent now to break the social system barriers and repair the social safety net for migrant workers. This will also add an extra incentive for the farmers to spend more.
The service sector is also becoming a new growth engine in Chongqing. Its catering sector is well-known across the country and the exhibition industry is also gaining steam as the city comes under the global spotlight.
Shao Zhanwei: deputy to the 11th NPC and Secretary of the CPC Wenzhou Municipal Committee, Zhejiang Province
Wenzhou, the boomtown of China's private economy, learned a painful lesson from last year's financial crisis. As Western consumers hunkered down in their opposition to unnecessary spending, many exporters, mostly small and medium-sized enterprises (SMEs), began spilling red ink—or worse, declared bankruptcy. Shoe manufacturing used to have a foothold in Wenzhou, with more than 5,000 companies in 2005. That number has since dwindled to 2,000.
Dim prospects have left manufacturers no other option but to restructure themselves and sharpen their competitive edge. Many introduced advanced technologies to improve product quality while others enhanced energy efficiency to cut costs.
While manufacturing remains a pillar industry, Wenzhou has taken steps to diversify into other emerging businesses, like solar power, semi-conductor lighting and bio-pharmaceuticals. The city's service sector grew a robust 11.5 percent year on year in 2009, an indication of internal economic vitality.
Wenzhou's entrepreneurs are well-known for their market-based and innovative business models, traits that will help them stand out among intense competitions.
Aside from this, over 2 million people from Wenzhou have moved overseas, leaving their desolate hometown to earn a living abroad but weaving a tight marketing network for companies back home. This may help pave the way for Wenzhou's private enterprises to secure a firm footing abroad.
SMEs across China share a common ailment—a lack of access to bank lending. In Wenzhou there is around 1 trillion yuan ($146.4 billion) in private capital flowing about with speculative intentions. It is suggested that policymakers deepen financial reforms and provide a legal environment for private capital to finance SMEs' growth.
Boosting Creative Idustry
Li Wuwei: Vice Chairman of the 11th CPPCC National Committee and Director of the Institute of National Economy under the Shanghai Academy of Social Sciences
With China-made products spreading worldwide, China has become the biggest manufacturing country. Now we have more and more voices for the transformation from "Made in China" to "Created in China."
This actually is a boost to many industries through upgrades in science and technological innovation. Only in this way can we increase the added value of the products and decrease their negative effects on things like the environment.
The creative industry plays an important role in this process. Creative industries focus not only on creation and innovation, but also the integration of technologies, products and culture. In addition, creative industries can evolve into other industries to further promote innovation and increase added value to other industries—thus boosting the innovation throughout the economy.
In 2009, for instance, our country's GDP increased by 8.7 percent, while creative industries increased by over 17 percent. These industries have indeed contributed much to our economic growth. However, this develops much faster in the big cities than in other parts of China.
We should, therefore, balance the development of creative industries in different places of China while combining local conditions and characteristics with the appropriate industries. Besides, the government should increase the investment in creative industries as well. Non-profit organizations play a very important role in this regard, too.
Turning Tech Into Products
Xu Guanhua: member of the 11th CPPCC National Committee and an academician of the Chinese Academy of Sciences
Science and technology are crucial for the transformation of China's economic development model. In the past several years, science and technology in China have developed very fast with many more papers issued in top international-level magazines—and more investments in the science studies and research.
But many products are more technology-oriented—not market-oriented. Thus they are consequently not so competitive since costs are high yet are not always immediately practical. Many of the researchers, rather, close their doors before considering market demands. For some products, in fact, they only produce samples, and neglect to make mass production.
In my opinion, to solve the above problems, we have much to do. First, we should develop a market-oriented technological innovation system. We should endeavor to determine why our products fail to enjoy strong market sales—a big concern of the Central Government. We should also speed up the reform on the evaluation and prize system of science and technology, while encouraging more breakthroughs in this field. At the same time, we should give younger people more opportunities and encouragement.