China: Closing the Great Divide Between Rich and Poor

Frank Ching  (Commentator based in Hong Kong)

Widespread popular protests across mainland China have prompted authorities to reverse a long-standing policy advocated by Deng Xiaoping - letting some people get rich ahead of others. There are more than 200 per day, on average, sparked by everything from illegal land seizures to official corruption and the growing gap between rich and poor.

A plenary meeting of the party's Central Committee last week decided to make the achievement of "common prosperity" the nation's policy, and to ensure co-ordinated and sustainable development.

The goal is to bridge the gap between rich and poor, city and countryside, and to avoid further polarisation of society.

The growing disparity between rich and poor was leading to social unrest, the Ministry of Labour and Social Security said this year.

It said the problem was likely to get worse unless something was done about it.

The new growth model is meant to be people-oriented, and is reflected in a new five-year plan for 2006 to 2010, which was approved by the plenary meeting. It emphasises sustainable development and seeks to improve efficiency and lower energy consumption.

Although full details of the plan have not been disclosed, leaders in Beijing are clearly prepared to accept a slightly lower rate of economic development as a trade-off for more balanced social growth.

The mainland economy has been powering ahead at 9 per cent growth per year. However, the goal for 2010 - a doubling of the 2000 gross domestic product - could be achieved with 7 per cent annual growth.

The worst problem engendered by China's rapid growth is the widening gap between rich and poor. The poorest 10 per cent of families own less than 2 per cent of all assets, while the richest 10 per cent own more than 40 per cent of the mainland's total assets, according to government figures.

The new approach to development is reflected in the five-year plan. While growth will still be fast, it will be "based on the scientific concept of development", according to a communique issue at the conclusion of the plenary.

This means that growth will be based on an improved economic structure, increased efficiency and reduced energy consumption. China will seek to raise energy efficiency, cutting power consumption by 20 per cent over five years.

At the same time the mainland, whose cheap labour has been used to manufacture goods for the world, will try to strengthen its own enterprises so that they become competitive internationally, and turn into famous brands.

"During the 11th five-year plan we must maintain fast and stable economic growth and support the building of a harmonious society," said the communique which asserted that the country was at a critical juncture in its economic reform.

It added that science and technology, education and trained personnel were the key factors for improving the country's competitiveness. "We have to face and solve the most crucial, direct and realistic problems of the people," the communique said.

Social goals for the next five years include implementing nine compulsory years of education, strengthening the legal system and making major improvements to housing, transport, culture, health and environmental conditions.

It was encouraging to see that the party plenum showed Beijing was aware of the need not to pursue economic growth blindly, but to try to develop in a sustainable and balanced way.

Unfortunately, the specific details of the five-year plan will probably not be released until next spring, when it is to be endorsed by the national legislature at its annual meeting.

(Originally appeared in the October 19, 2005 issue of South China Morning Post in Hong Kong, reproduced here with permission.)