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China: From economic growth to sustainability

by Xinhua Writer Liu Jie

BEIJING, Oct. 7 (Xinhua) -- Sixty years ago when New China was just founded, Dean Gooderham Acheson, then U.S. Secretary of State, asserted that the Communist government would be unable to feed its 546 million population just like its predecessors.

Sixty years on, the 1.3 billion Chinese are not only able to feed themselves, but are expected to lead the world out of the worst economic recession in seven decades.

Starting from scratch, the Chinese economy has managed an 8.1 percent annual growth in the past 57 years. As western economies are still struggling in the current financial crisis, China achieved a 7.1-percent-growth in the first half of 2009.

Since it adopted the policy of reform and opening up, China hastransformed itself within three decades from a semi-secluded country with a highly centralized and planned economy into an open and market-oriented one.

It's only a matter of time when China will replace Japan as the world's second largest economy or even challenge the United States, predicted some foreign analysts.

FOOD SECURITY AND POVERTY REDUCTION

Hou Bingxin, a farmer in west China's Shaanxi Province, still remembered the bitter days of having nothing to eat in the 1950s. "We have to squeeze some wild leaves for food when we could no longer put up with hunger," said the 82-year-old.

Hou's bitterness was shared by many who survived famine and malnutrition in the early years of New China.

In 1949, China's grain output was only 113 million tonnes. Feeding the 540 million Chinese was then top priority for the young government.

Food-rationing coupons had been issued to balance demand and supply in those days when "rice was as precious as gold".

It was not until late 1970s when the household responsibility system, modeled on a pilot program in east China's Xiaogang Village, was introduced across the country.

The new system, which allowed farmers to sell their surplus produce in markets after fulfilling their due quotas to the commune, was an instant success that quickly lifted people out of poverty.

China's grain output therefore grew by 8 percent annually between 1982 and 1991, making the country the biggest grain producer in the world.

To date, China has enjoyed six consecutive good harvests thanks to new policies including the abolition of the 2,000-year-old agricultural tax in 2006, feeding 21 percent of the world's population on less than 10 percent of the world's arable land.

Now food is no longer a problem for Hou Bingxin. Varied poultry meat is his regular dish, while wild plants are processed and packaged as healthy food supplements.

As food is largely secured for the 1.3 billion Chinese, thousands of millions of Chinese were also rid of poverty.

By last year, people with an annual per capita income of no more than 785 yuan (114.6 U.S. dollars) had been reduced from 250 million to 14.79 million, while people on low income, between 786 yuan and 1,067 yuan a year, was down to 28.41 million.

A World Bank report in 2008 attributed two-thirds of the global poverty reduction efforts in the past 25 years to China.

In the meantime, China's per capital income has increased 77 folds to exceed 3,000 U.S. dollars a year, ranking alongside middle-income countries.
FOREIGN TRADE

Li Huan, manager of Hong Kong Yuen Tai Trading Co., Ltd, is a big fan of Canton fair (China Import and Export Fair), China's only international trade fair for many years since 1949.

He still remembered his first trip to the fair in 1957 when there was almost nothing to trade. "Only textile products and some local specialty were on display. In total there were no more than 10,000 items," he said.

At that time, China's trading partners were mostly former Soviet Union and other eastern European countries. When China's relationship with the Soviet Union deteriorated by the end of the 1950s, it became isolated in international trade.

The reform and opening up policies masterminded by late Chinese leader Deng Xiaoping in 1978 have paved the way for China's shift from a planned economy to market economy.

It also ushered in the first special economic zones along China's coastal regions. With the blessing of most favorable policy incentives such as tax break and cheap land, these areas became the "powerhouse" of Chinese economy with their export-oriented businesses.

In 1950, China's export totaled a meager 550 million U.S. dollars, of which 80 percent went to Socialist countries. Six decades later, the figure increased some 2,600 folds to 1.43 trillion dollars in 2008. Products with "Made in China" tags are everywhere.

According to the World Trade Organization, by the end of June this year, China had replaced Germany as the world's largest exporter. And its foreign reserves topped 2.13 trillion dollars, far exceeding the next largest holder, Japan.

During 1953-1957, when the cash-strapped China embarked on an intensive program of industrial growth in its first five-year plan, it had to borrow 1.9 billion dollars from the Soviet Union to construct steel mills, coalmines and power plants.

Now with improved infrastructure and legal environment, China has become the world's second largest destination for foreign direct investment (FDI), drawing over 850 billion U.S. dollars from overseas companies since 1978.    

INSTITUTIONAL REFORM

Quanjude, China' renowned restaurant chain for the time-honored Peking Roast Ducks, sold its 148 millionth duck days ago.

"Can you imagine we used to sell only one piece of duck blood to earn a couple of cents a day?" Jiang Junxian, board of the director for the restaurant marveled as he depicted the bleak days for the century-old chain eatery before 1949, when private businesses struggled to survive amid wars and political chaos.

In 1952, the central government decided to put private businesses under public control and establish a Socialist ownership to pool resources together.

Since early 1980s, the Chinese leadership started to adopt a pragmatic approach to solve political and socio-economic problems.

Policies were made to encourage rises in personal income and consumption, as well as business competition in a bid to stimulate productivity.

A beneficiary of such policies, Quanjude has expanded its chain stores to 62, including five overseas. In 2007, the restaurant chain was listed in the Shenzhen Stock Exchange. One year later, its sales revenue topped 1.1 billion yuan (one dollar equals to about 6.8 yuan).

Also in 2008, China' s GDP rocketed to 3.86 trillion dollars as against 27.6 billion dollars in 1952. Per capita disposable income rose from less than 100 yuan in 1949 to 15,781 yuan in 2008, indicated data from the National Bureau of Statistics. 
 GREEN CHALLENGES

As China's economy has been built on an extensive growth model, the scarcity of natural resources and environmental degradation are increasingly the constraints for its sustainability.

"We should fundamentally transform the growth pattern," said WuJinglian, economist and a staunch supporter for China's economic reform.

As a nation, China boasts an abundance of natural resources. But per capita amount is much less than the world's average, especially for resources of strategic importance such as oil, natural gas and iron ore.

Since China's rapid economic expansion has been propped up by the most fragile ecological conditions, the country is now facing its most severe environmental challenges in history.

Take Shanxi, a coal-rich province in northern China, as an example. A leading coal-producer with one-third of the country's coal reserve, Shanxi had witnessed a double-digit growth for seven straight years before 2007.

However, a high dependence on coal finally brought down Shanxi's GDP by 8.1 percent in the first quarter this year, making the province the only one with negative growth.

Shocked by the punishment from nature, the provincial government decided to close down 2,100 coal pits by the end of 2010, and equip the remaining with clean energy capacities. It also planned to diversify its industry by introducing organic farming.

Shanxi's painful change is an inevitable path for the country to follow.

According to a state guideline released in 2006, China promised to lower emissions by 10 percent and reduce its energy consumption per unit of GDP by 20 percent between 2005 and 2010.

That equals to a reduction of 1.5-billion-tonne greenhouse emission, or 300 million tonnes of carbon dioxide every year.

On Sept. 22, China renewed its green promise to the world as President Hu Jintao pledged to cut carbon emissions by a "notable margin" by 2020 from the 2005 level at the United Nations General Assembly.

Enterprises are urged to undergo environmental evaluation for their bank credit whereas highly-polluted and energy-consuming construction projects will be curbed.

Green technology and renewable energy has been mapped out as the next growth engine.

China aims to increase consumption of renewable energy to ten percent by 2010 and 15 percent by 2020, with an emphasis on providing advanced energy technologies to rural China to accommodate 750 million villagers.

By 2008, according to the Global Wind Energy Council, China had the largest fleet of wind turbines in Asia, with a power-generating capacity of 12.21 million kilowatts, ranking 4th in the world.

Government incentives have brought on board some 600 solar cell companies, mostly privately-owned, which produce 44 percent of the world's cells for solar power devices.

New energy automobiles are also on the card as the government offers to subsidize owners. In addition, China plans to install 150 million energy saving light bulbs in millions of households.

As the Economist magazine put it, despite China's huge economic success in the past decade, it still needs the same miracle in environmental protection to make a real China miracle.

The Chinese leadership is fully aware of the daunting tasks facing the country.

"One point three billion is a very big number," said Chinese Premier Wen Jiabao. "If we use multiplication, any small problem multiplied by 1.3 billion will end up being very big. Likewise, a big aggregate divided by 1.3 billion would come to a very tiny figure," he added.

As China celebrated the 60th anniversary of New China on October 1, the country has already set its eyes onto the challenging future.

 

 


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