China: On Wen Jiabao’s Government Work Report 2011

By Dr. B. R. Deepak

At the outset, Wen Jiabao’s Government Work Report of 2011 is different from other government reports presented hereto by the Chinese Premiers. Instead of starting with the summary of the achievements of the past one year, this time Wen summarized the work done by his government in the last five years i.e. during the 11th Five Year Plan (2006-2010); he then sets major targets to be achieved in the next five years, during the 12th Five Year Plan (2011-2015), and finally elaborates what are his immediate priorities for the year 2011.

As regards the achievements in the last five years, the Chinese government compliments the leadership and the countrymen for a wonderful job of maintaining the high economic growth trajectory, especially in the face of world economic meltdown that severely hit the exports in China and rendered millions jobless. And also in the face of unprecedented natural calamities such as Wenchuan and Yushu earthquakes, China seems to have kept its overall economic as well as social environment shockproof, and steered itself out of various uncertainties. The economy continued to grow at an average growth rate of over 11.2% and in specific years it even grew at 14% e.g. the year 2007. It became a 5 trillion dollar economy replacing Japan to become the 2nd largest economy of the world even though the per capita income remains around 4000 USD per annum. Therefore, in the face of very slow economic development across globe, India being an exception, one may surmise that China along with other emerging economies such as India, Brazil and Russia has contributed to the stabilization of the world economy.

It could be discerned that the ‘Three Rurals’, a term used for the agriculture, countryside and peasants remained the top priority of the Chinese government during the last 5 years. The accumulative investment for the ‘Three Rurals’ reached over 3 trillion yuan, registering 23% increase annually. The net per capita of the rural China touched 5919 yuan. However, various concerns pertaining to the inflation, job creation, income disparity etc. are obvious in the report and have been prioritized for immediate action in the year 2011. In particular, inflation remains high on the government agenda, and that’s why we hear Wen using terms such as ‘controlling commodity prices’, ‘managing inflation’, ‘maintaining overall price stability’, ‘macro economic control’, ‘supervision of prices’ etc. measures as ‘top priorities’ for the government. Compared to India, China should not have a problem to deal with the inflation as it has registered a very impressive food grain output in the last five years; the industrial production has also been superb, and moreover with over 1.3 trillion dollar foreign reserves the problem should not be too hard to handle.

Nevertheless, the most crucial issue for the Chinese government in the coming years would be the growing income disparity and the distribution of the incomes; it has to be seen how China will unfold the policies to tackle these problems. These are the issues that are very crucial for overall social stability in China. China is very nervous about any public protest, and most of the protests have been rooted in expanding social imbalances, especially the rural urban divide, official highhandedness, corruption, violation of laws, land fragmentation, land acquisition leading to forced evictions, unemployment, unnecessary cadre strength in the countryside, environmental hazards etc. issues. Reuters reported on March 5, 2011 that China’s spending on “public security” has outstripped the defence budget for the first time. The planned spending on law and order items has been pegged at 624.4 billion Yuan ($95.0 billion) for the year 2011.

As far as the 12th Five Year Plan is concerned, it would be the crucial period for building a modest well off society, deepening the reforms, as well the acceleration and transformation of the economic development in China. China plans to move away from the labor intensive industries to the higher end manufacturing and service industries. China would like to shed the image of being viewed as the ‘world factory’ and venture in becoming the R&D hub of the world. To this end, 2.2% of the GDP would be spent on R&D. Wen has also pledged to build 36 million affordable apartments for low-income people, and creation of 9 million jobs in the year 2011, and we can expect rise in the wages and incomes of the working class. Chinese premier has projected a growth rate of 7% which is not bad or slow at all during the 12th Five Year Plan. He has projected that by 2015 China’s GDP at 2010 prices should reach over 55 trillion yuan (over 8 trillion USD). According to a study conducted by Price Waterhouse Cooper, China will be the largest economy in the world by 2020 and will replace the US by 2030. Therefore, there will be major shifts in the world economic order by 2020 in which emerging economies will become more important thus further enhancing their economic as well as political clout at the world stage. China also intends to control its population at 1.39 billion and an urbanization level of 51.5% by the year 2015.

As regards the priorities for the year 2011, Chinese premier says that since 2011 is the opening year of the 12th Five Year Plan, it would be extremely crucial for accomplishing the tasks of the next five years. China will increase its GDP by around 8 percent, further optimize the economic structure, keep the consumer price index increase around 4 percent, create more than 9 million jobs in urban area and keep the registered urban unemployment rate at 4.6 percent or lower, according to the report. Agriculture will continue to dominate the government proceedings in 2011 as well, as the central government’s outlay for the ‘Three Rurals’ has been proposed at 988.45 billion yuan, an increase of 130.48 billion Yuan over the year 2010. Meanwhile, China would continue with the practice of food subsidies to the farmers. Carbon dioxide emission is set to be slashed by 17 percent in the five years on the basis of 2010, as part of the country’s active efforts to grapple with climate change. The reduction target will move China closer to achieve its pledge to cut carbon intensity by 40 to 45 percent by 2020, relative to 2005 levels, reveals the report.

As regards the national defence, there is a single paragraph in the Government Work Report that says that Strengthening of the national defense and building of a strong people’s army is an important guarantee to safeguard the national sovereignty and security. It states that a strong army is also crucial for building a moderately well off society. The report says China will build capacity to win local wars in an information age, and to respond to multiple security threats and accomplish a diverse array of military tasks. The military will resolutely carry out urgent, difficult, dangerous and daunting tasks, such as handling emergencies and relieving disasters. There is no mention of the defense budget in the report, however, China reveled before the start of the NPC session that it plans to raise its defense budget by 12.7 percent to 601 billion yuan (91.5 billion U.S. dollars) in 2011, compared to an increase of 7.5 percent last year. While answering foreign journalists questions, Li Zhaoxing, spokesman for the Fourth Session of the 11th National People’s Congress said that while China’s military spending amounts to about 1.4 percent of its GDP, India’s ratio was much higher than 2 percent. In his budget speech on February 28, 2011, Finance Minister Pranab Mukherjee announced Rs 1,64,425 crore (US$ 36 billion) for defense during the next financial year 2011-12, which over 2.5 times less than the Chinese official budget.

Finally, the Chinese Premier promises to be the standard bearer of peace, development and harmony. He says China will take an active part in multilateral diplomacy, use the G20 summit and other diplomatic forums for strengthening the coordination of macroeconomic policies, and advance the reforms of the international economic and financial system such as IMF and the World Bank. The report says that China will maintain sound and steady relations with major powers. As far as relations with its neighbors are concerned, China has promised to adhere to the thesis of ‘good neighborliness and neighbors as partners.’ It also talks about promoting regional and sub regional cooperation. The last 32 years of economic reforms has brought earthshaking changes to the socio-economic fabric of China. What could be the direction of the wind in the next decade for China? We will have to wait and watch.

(Dr. B R Deepak is professor of Chinese and the Dean of School of Languages, Doon University, Dehradun India, he could be reached at [email protected])