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Issue #1629      March 5, 2014

Chinese solutions

China continues to surprise. The government of the nation which, in the not so distant future, could displace the United States as the first economy in the world has announced a new reform package which seeks to reorient its growth model toward internal consumption and limit the country’s dependence on external markets.

In 1979, a process of socioeconomic transformations designed to unleash the country’s productive forces began. The development model implemented was based on stimulating foreign investment and exports, with excellent results sustained over the years, which allowed it to accumulate a surplus of billions of dollars.

The Chinese economy was also able to manoeuvre in order to survive the explosion of the international financial bubble in 2008.

However, the Asian giant now has a dream: to double the gross domestic product and per capita income by 2020, comparing these indicators with those attained in 2010 when the country grew by 10.3 percent. For that, President Xi Jinping has stated that the country must make strategic readjustments to its economic structure and increase efficiency in state supervision mechanisms.

The government aspires to the entire population of 1.3 billion Chinese equitably enjoying the benefits of development and the measures announced by the 18th Communist Party Central Committee in its recent third plenum are directed toward this goal.

“The fundamental objective of the reforms approved is to improve and develop socialism with Chinese characteristics and to move forward with the modernisation of the system and the capacities of the country’s government,” states a communiqué read in the event’s closing session.

The document places emphasis on the need “to establish an appropriate relationship between the government and the market” in order to grant the latter “more decisive participation in the assignation of resources.”

According to the official press, the Communist Party of China (CPC) is to create fair, open and transparent market regulations, as well as to improve the mechanism of market prices so that businesses can operate in an independent manner.

At the same time, China is to undertake fiscal reforms, lower the threshold of foreign investment, intensify the development of free trade areas and increase the opening of interior, coastal and border areas, with a view to creating a new kind of relationship between industry and agriculture.

Other measures approved will allow small farmers to enjoy more property over land and production means, establish a sustainable social security system, create new urban-rural relations in order to solve difficulties arising from large waves of internal migration, and increase the population’s standard of living in terms of access to health and education services.

Also announced was a modification of the family planning policy, taking into account demographic changes in the country with the highest number of inhabitants in the world – and the oldest – to satisfy the desire of many families to have more than one child, which has been the established limit.

The communiqué also announced the decision to direct more resources to the army and to promote scientific and ecological development.

But what is the nature of these reforms?

As Cuban analyst Eduardo Regalado, at the International Political Research Centre, explained to Granma, given the financial crisis in its principal markets (Europe and the United States), the Chinese leadership has been obliged to reduce its dependency on foreign capital and strengthen the internal market, one of the largest in the world.

Chinese products which, prior to the crisis, sold very well given that they were cheaper, began to be prejudiced by the competition of European and US products (in other words, from the same countries to which they sold them). At the same time, Chinese acquisitive power has increased and this raises the question of why sell to others if the same goods can be purchased in China.

For Regalado, these adjustment measures seek to further raise the population’s standard of living and to close the gap in development between rural and urban areas. They would also provide a solution to the country’s internal difficulties, which have occurred as a consequence of development itself, such as environmental contamination, migration from rural areas to cities, among others.

Moreover, an important transformation within the projections of Chinese leaders is to transition from a rapid growth model – with the country growing as more factories open – to a model of intensive growth, in which science and technology play a significant role in production processes, a model which, at the same time, is to address ecological issues and depends less on external markets.


Next article – America vs the world

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