Shinjin Liu, Vice Minister of DRC
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Transcript of Shinjin Liu, Vice Minister of DRC
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China 2030Background and Key Elements
Development Research Center of the State
Council, China
November 2012
Liu Shijin
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Background to China 2030:Building a Modern,
Harmonious and Creative High Income Society
Chinese and world bank leaders agreed to conduct
a jointly research in 2010.
First time to organize a joint team by a Chineseresearch institute and World Bank, which included
more than 50 experts.
Kicked off since Nov 2010, finally released in Feb
2012
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Background to China 2030:Building a Modern,
Harmonious and Creative High Income Society
The research mainly focused on the development
vision which is to build a modern, harmonious and
creative high income society in China by 2030.
Besides overall guidance, five supporting groups
were set up , which correspond to five branches of
the vision research: structural reform, innovation,
green development, social development ,China
and the rest of world.
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Background to China 2030:Building a Modern,
Harmonious and Creative High Income Society
A lot of field studies, seminars and background
papers
The preliminary report was discussed at a high-levelinternational conference held in Sep 2011, though
which we got comments and suggestions from many
first-class experts as well as the Chinese ministries
and local governments
The final version, including an overview and six
supporting reports, builds on the these comments
and suggestions.
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Background to China 2030:Building a Modern,
Harmonious and Creative High Income Society
The joint research gave full play to the
complementary advantages of China and World
Banks experts. These experts from World Bankare skilled in international analysis and expertise,
while Chinas counterparts know well about
domestic issues as well as macro conditions.
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Key Elements of Historical Experience How to recognize the experience of Chinas
development in the past? The so-called ChinaDevelopment Model has caused widespread
concerns. Five important characteristics:
Pragmatic and effective market-oriented reforms
Finding the balance between growth, social andmacroeconomic stability
Promoting the competition across regions
Promoting the integration of domestic market
Steadily integration with the global economy
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Challenges and Opportunities
In the next two decades, both international anddomestic development environment would change a lotand will be much different from that during the past
three decades.
International environment:
The process of globalization would not step back
regardless of trade protectionism
The balance of power in developed countries andemerging economies will change significantly
New technological breakthroughs
Structural reforms of the international monetary
system and global governance
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Challenges and Opportunities Considerable advantages and opportunities: high savings,
increasingly skilled labor and the potential for furtherurbanization.
The risks and challenges to address at the same time:aging society, rise income inequality, environmental deficitand external imbalances.
With reference to the development path of other
successful catching-up economies, the annual potentialgrowth rate of Chinas GDP output will be expected todecline to around 9% in 2010-2015, to about 7% 2015-2020, and then to 5%-6% during 2020-2030
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Development Vision
The predicted results are not low when compared tothe average growth rate of the whole world.Considering the challenges and opportunities mentionabove, the report proposed a vision of building amodern, harmonious and creative high-incomesociety in China by 2030
By 2020, Chinas GDP at current prices will be close
to or exceed that of the United States
By 2020, Chinas GNI per capita will be close to orreach the threshold of high-income groups
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Projected growth pattern assuming steady
reforms and no major shock
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GDP growth prospects: China Vs.US
6
21
54
182
1523 38
95
0
50
100
150
200
2010 2015 2020 2025 2030 2035 2040 2045 2050
G
DP
China
US
GDP(Trillion $, atcurrent price)
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GDP growth prospects: China Vs. major
developed countries
10%
23%
39%
60%
11%
26%
44%
70%
0%
20%
40%
60%
80%
2010 2015 2020 2025 2030 2035 2040 2045 2050
GDP/GDP
GDP/GDP
GDP per capita: China/the average of UK, France,Germany and Japan
GDP per capita:China/US
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The core of new strategy is to transform the
government roles To achieve the vision, China needs to accelerate the
adjustment of the existing development strategy.
The core measure is to transform government roles and to
redefine the relationship between the government and themarket, enterprises and society. When a catching-upeconomy gradually close to technical frontiers,government should reduce or even exit from the directlyintervention in the allocation of resources and play agreater role in providing public goods and services, partlybecause of increasing uncertainties.
More important is to provide invisible public goods andservices including institutions, regulations and policies.
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Major characteristics of new strategy
More emphasis on improving the quality of growth
while continuing to raise the income level
To achieve a more balanced and sustainable growth
To strengthen the innovation and creativity
To fully exploit the potential of human resources
To pay more attention to combined effects of market,
the rule of law, values and moral
Therefore, the report proposed six pillars ofthe new strategy
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Pilliar1:Structural reform for a market-based
economy with sound foundations
State-owned capital should be used solely or mainly forthe provision of public goods and services, which rangefrom national defense at one end to infrastructure, reliable
energy supply, postal service, social protection, and basicR&D at the other end
The government should securitize its implicit equity inSOEs and strengthen the management and oversight onthe state-owned capital and the use of its return.
To reduce barriers against entering into the strategicindustries for the private enterprises and enhancecompetition and efficiency
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Pilliar1:Structural reform for a market-based
economy with sound foundations Financial sector: promoting the liberalization of interest
rate step by step, regulating capital markets andreshaping the financial regulatory framework.
Labor market: accelerating the reform of householdregistration system, improving labor force participationrate, and revising polices on employment, wage-setting,social security and tax.
Land market: improving the agricultural landexpropriation to protect farmers' interests, increasing theefficiency of land use, and reducing the reliance of localgovernment on land-related income.
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Pillar2: speeding up innovation
There is no significant impacts on boosting productivitypurely through increasing the R&D expenditure sharein GDP. Government should pay more attention to
institutional reforms instead of the development ofspecific technologies.
Encouraging large-scale private enterprises to play theleading role in the industrial innovation, while actively
promoting the development of innovative SMEs. Attracting more multinationals to set up local R&D
institutions, which will help to the upgrading ofdomestic industries
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Pilliar2: speeding up innovation
Increasing the proportion of universities and researchinstitutions which are engaged in basic research, andimproving the research capacity of universities
through further opening-up
Strengthening vocational training and improving thequality of human capital
Developing the innovative cities
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Pillar3Seizing the Opportunity of Green
Development
Green sources of economic growth:
To recognize that green development can bring about
new opportunities to accelerate technical
breakthroughs and sustain growth, in stead of
additional burden.
Traditional sectors grow greening
New green industries
Emerging service industry for green products andservices
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Pillar3Seizing the Opportunity of Green
Development
Advantages: available technology, markets,
advantage of backwardness, resources,
industrialization The key is to play the role of government
appropriately and form the long-term incentives to
promote green development in accordance with
market mechanism.
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Pillar 4Equal Opportunity and Basic
Security for All
Income inequality in China is attributed to both the
human capital diversity and the inequality of
opportunity related to employment, social security
and other basic public services and social mobility.
To implement social policy for development because
each person is regarded not only as a consumer, but
also as a producer and innovator
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Pillar 4Equal Opportunity and Basic
Security for All
Strengthening the development of human capita and
the provision of basic social welfare (but avoiding
welfare dependency); improving the opportunity
equality related to education, social security,employment and business; giving full play to each
person's potential.
Most important is to improve institutions related to
pension, health care, education, employment, etc.
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Pillar5Establishment of the sustainable financialsystem compatible with the transformation of
government functions
The share of China's fiscal revenue in GDP has been notlow and the potential to increase further is limited
Key reforms:
Adjusting the structure of fiscal expenditure to make it
compatible with the transformation of government
functions
Addressing the mismatch between fiscal resources and
expenditure responsibilities of local government
Improving the efficiency of revenue mobilization
Strengthening fiscal discipline
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Pillar 6Achieving mutually beneficial relations
with the rest of world
Key PrinciplesOpen markets, fairness and equity,mutually beneficial cooperation, global inclusiveness,and sustainable development
Major fields to open up further
Upgrading industrial chains and opposing trade
protectionism.
Services liberalization to promote domestic competition
Speeding up the outwards direct investment and promotingthe development of transnational corporations in China
Steadily liberalization of capital account and
internationalization of the RMB
Recognizing the importance, conditions, transparency and
safeguards of foreign aid
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Pillar 6Achieving mutually beneficial relations
with the rest of worldWith the improvement of national status and per capitaincome, China, as an important stakeholders amongglobal governance arrangements, will be in line with the
mutual interests of China and other economies
Participation in global governance will be an process ofmutual adaptation between China and the rest of world.
Large scale of economy but low per capita income
Participating the rule-makings and reforms related tointernational trade and capital flows
Promoting the global climate negotiations and the reformof the international financial system
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Overcoming resistance and strengthening
coordination to implementing reforms Sequencing reforms: highest priority should be
placed on the reforms in the fiscal, financial andenterprise sectors, which boost reforms in other
fields. Overcoming opposition to reform: vested interests,
those whose are likely to be hurt from reform,opinion makers.
It is necessary to find a proper balance amongvarious stakeholders in order to get full support toreform
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Overcoming resistance and strengthening
coordination to implementing reforms To effectively promote the reforms and ensure the
ultimately successful implementation of the newstrategy, it is essential to not only have a strong
leadership of the central government, but also toencourage local and grass-roots reform experiments.
Focus on management of macroeconomic and otherrisks during the process of transition and maintain a
proper balance between the solution to short-termproblems and long-term strategy
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Thank you!