Transcript Group 5 - Kleykamp in Taiwan

China’s Economic
Rebalancing
Group 5
Sophie Lo
Julia Brito
Michael Chou
Howard Chang
The five-year plan
 Every five years, China’s Central
Government issue a new Five-Year Plan, a
detailed outline for the country’s economic
goals for the next five years.
 The first plan initialed at 1953,it is China's
strategic plan of national economy and
social development.
 The name of the 11th five-year program was
changed to "guideline“ in Chinese.
(English translation remain the same)
China’s 12th Five Year Plan
(2011-2015)
 The 12th Five-Year Guideline was debated in
mid-October 2010 at the fifth plenary
session of the17th Central Committee of the
Communist Party of China.
 A full proposal for the plan was released
and approved by the National People's
Congress on March 14, 2011.
 The China’s rapid development during the
past 30 years has lifted millions of citizens out
of poverty, but has raised the question of
sustainability as China grapples with
challenges such as pollution, intensive
energy use, and resource depletion.
 It’s the turning point from the China’s
previous emphasis on headline growth;
China is now prioritizing strategies and
measures to ensure long-term prosperity for
the entire nation.
 Emphasises on “higher quality growth”
(to decrease wealth disparity)
 Premier Wen Jiabao:We should not only
make the cake of social wealth as big as
possible, but also distribute the cake in a fair
way and let everyone enjoy the fruits of
reform and opening up
China’s 12th Five Year Plan
(2011-2015) Key theme
 It provides strategic objectives, directions,
guidelines and roadmaps for
 Innovation
 Expenditure on research and development to
account for 2.2 percent GDP;
 Every 10,000 people to have 3.3 patents.
 Environment & clean energy
 Non-fossil fuel to account for 11.4 percent of primary
energy consumption;
 Water consumption per unit of value-added
industrial output to be cut by 30 percent;
China’s 12th Five Year Plan
(2011-2015) Key theme
 Agriculture
 Annual grain production capacity to be no less than
540 million tones;
 Social management
 Improved public service for both urban and rural
residents;
 Reform
 Encourage qualified enterprises to get listed in stock
markets;
 Improved government efficiency and credibility
China’s 12th Five Year Plan
(2011-2015) Key theme
 Economic targets
 GDP to grow by 7 percent annually on average;
 More than 45 million jobs to be created in urban
areas;
 Urban registered unemployment to be kept no
higher than 5 percent;
 Prices to be kept generally stable.
China’s 12th Five Year Plan
(2011-2015) Key theme
 Livelihood
 Construction and Renovation of 36 million
apartments for low-income families;
 Minimum wage standard to increase by no less than
13 percent on average each year;
China’s 12th Five Year Plan
(2011-2015) Key theme
 Economic restructuring
 Rise in domestic consumption;
 Service sector value-added output to account for
47 percent of GDP, up 4 percentage points;
 Urbanization rate to reach 51.5 percent, up 4
percentage points.
12th Five Year Plan on consumption,
investment and exports
 This is the first national special plan for the domestic
trade in China to launched under a strategic
background of boosting domestic demands,
especially the consumption demands.
 Establishing a long-term mechanism to expand
consumption, Optimizing investment structures,
Quickening pace of the building of a new growth
pattern that is jointly driven by consumption,
investment and exports.
What’s the Problem
 Troubling consequences of China’s capitalintensive growth model has been that
companies (and the government) have
captured much of the enormous wealth
generated in the last three decades at the
expense of Chinese households.
 This dynamic is not only exacerbating an
already yawning gap between the
government and business elite on the one
hand and average Chinese citizens on the
other, it is also repressing consumption.
What’s the Problem
 A broken social welfare system, which
cannot adequately deliver public goods
such as pensions and healthcare, constrains
consumption and encourages saving further.
What’s the Problem
 China’s economy is overly dependent on
fixed asset investment and exports.
 Producing too much and consuming too
little.
 To have higher consumer spending
(spur domestic demand)
 Improving the social welfare network
 Boosting wages
 Creating new jobs
 Promoting urbanisation and supporting affordable
housing
 Adjusting taxes
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12th Five Year Plan on
consumption
 The development of the domestic trade in
China will focus on improving the circulation
efficiency, facilitating the life of the people,
guaranteeing commodity quality, guiding
production development and promoting
the consumption of the of the residents.
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12th Five Year Plan on
consumption
 The Plan is of great importance in guiding
the behavior of the market entity realizing
the healthy and rapid development of the
domestic trade and playing the role of
domestic trade in expanding consumption,
improving people’s livelihood and guiding
production.
 Social safety also help raising consumption.
If the government upgrades the provision of
pension, health insurance, public education,
and affordable housing, citizens will have
more money available to buy consumer
goods and other items.
 China’s rebalancing agenda is not merely
about economics but, ultimately, the
political viability of the Chinese system.
 Dragon claws
 The first Ming Emperor decreed that the dragon
would be his emblem and that it would have five
toes (or claws)
 The four-clawed dragon was typically for imperial
nobility and certain high-ranking officials.
 The three clawed dragon was used by lower ranks
and the general public (widely seen on various
Chinese goods in Ming Dynasty).