National Strategies and Policies for Growth
The 16th Central Committee of the Communist Party of China formulated the 11th Five-Year Economic Plan for China in October of 2005.
The current plan will stress the scientific approach to development and the building of a harmonious society as the overall guiding principles for China in the years 2006-2010.
The main tasks for this plan are
- To expand domestic demand, especially consumption, so as to transform economic growth from being driven by investment and export towards consumption, investment, domestic and foreign demand. This plan will balance investment and consumption, as well as raise the income of the country’s residents so as to give them more purchasing power.
- To optimize industrial structure by promoting the development of primary, secondary, and tertiary industries and upgrading facilities, while simultaneously building a “new socialist countryside” and promoting entrepreneurial urbanization. Priority will be given to further development of the service industry, to expand, improve, and standardize the market.
- To use resources efficiently and protect the environment while fuelling balanced economic growth; develop and realize a mode for sustainable development.
- To accelerate the development of science and technology, human capital, and independent innovation so as to cultivate people endowed with capabilities and integrity, and to generate growth with a competitive edge.
- To deepen institutional reform and opening up, follow more market-oriented strategies for economic growth, and re-evaluate the role of the administration and regulations on the fiscal and tax systems, the financial sector, and domestic development.
- To focus on the well-being of the people, improve living standards, and achieve humane development. This concept combines economic, political, cultural, and social construction, aiming to tackle all aspects the social welfare system, including pensions and health care, build individual capacities, and promote cultural and ethical ideals.
The Plan acknowledged many challenges facing China...
... in its pursuit to achieve the above-stated objectives, including:
- Decreasing domestic consumption
- Systematic bottlenecks in the socialist market economy system
- Weak financial system
- Weak agricultural foundation
- Lagging rural development
- Irrational industrial structures
- Weak competitiveness in world markets
- Environmental degradation and shortage of resources
- Large unskilled labour force
Building a new socialist countryside
The Chinese government has set rural and agricultural development as its foremost priority in the 11th Five-Year Plan. The initiative to build a new socialist countryside is an earnest effort to balance the rural-urban disparities in economic and social development. The Central government has already spent an estimated US$ 44.9 billion on agriculture, rural areas, and farmers in 2006. Expenditures have funded and will continue to fund modern production development, construction of infrastructure, education, and skills training, improvement of living standards, improved sanitation and appearance, and effective and democratic governance.
This policy affects all parts of inland China that is not an urban centre. This includes regions in the central agricultural belt, including Hebei, Henan, Shaanxi, Hubei, Hunan, and Anhui, western and south-western China, including Gansu, Ningxia, Qinghai, and the far western Xinjiang. Over 800 million Chinese live in these areas, nearly 70% of China’s total population and almost all of China’s poor population.
Specific measures include rescinding the agricultural tax throughout the country, a benefit of US$ 13 billion to farmers; over US$ 13.6 billion annual spending to ensure proper and effective governance; US$ 9.5 billion investment in science and technology; complete elimination of tuition and miscellaneous fees for all rural students receiving compulsory education; hospital and medical centre renovations; and the establishment of a new type of rural cooperative medical care system by extending the scope of current trials to 40% of the countries in China this year and by doubling the allowances paid by the central and local governments to farmers.