Transcript Targets of the 12th five

Progress of China’s Economic Reform
and Opening Up
MA XIAOFANG
PhD, Associate Professor
Department of Economics
Chinese Academy of Governance
03/09/2013
Curriculum Vitae
Education Background:
•
•
2005- 2008 Phd in Economics , China Renmin University
2001-2002 Msc. in International Banking and Finance Studies,
Southampton University in UK
Work experience:
•
2006- Associate professor, Economics Department, Chinese Academy
of Governance
•
1999-2006 lecturer, Economics Department, Chinese Academy of
Governance
•
Research Focus:
•
Macro-economy, Financial markets, risk management, banking
regulation.
Contents
 China’s economic achievements from 1978
•
Three stages of China’s R&O
•
Current situation of economy
•
Guiding concept of the 12th five-year plan
•
Targets of the 12th five-year plan
GDP growth (1978-2011)
(100M Yuan)
19
78
年
19
80
年
19
82
年
19
84
年
19
86
年
19
88
年
19
90
年
19
92
年
19
94
年
19
96
年
19
98
年
20
00
年
20
02
年
20
04
年
20
06
年
20
08
年
20
10
年
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
The second biggest economy in the world
• The annual average growth rate
of GDP is 9.7% after 1978
•
GDP of 2010 is 39800 billion
yuan, which is 109 times of 1978
• The second biggest economy by
the end of 2010
• The growth rate is 2.5 times of
that of the world
Fiscal revenue (1978-2011)
(1M Yuan)
2010年
2008年
2006年
2004年
2002年
2000年
1998年
1996年
1994年
1992年
1990年
1988年
1986年
1984年
1982年
1980年
1978年
10,000,000
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
Fiscal revenue (1978-2011)
• The annual average growth rate of FR is 13.45%
after 1978
• FR of 2011 is 10374 billion yuan, which is 78
times of 1978
Export and import (1978-2011)
(1M Yuan)
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
出口:FOB
进口:CIF
2,000,000
19
78
年
19
80
年
19
82
年
19
84
年
19
86
年
19
88
年
19
90
年
19
92
年
19
94
年
19
96
年
19
98
年
20
00
年
20
02
年
20
04
年
20
06
年
20
08
年
20
10
年
0
Export and import (1978-2011)
• The trade volume of export and import was 2974
billion US dollar in 2010, ranked second in the world
• The annual average growth rate of E&I is 16.8%
after 1978, the trade volume of 2010 was 143 times
of 1978
• Chinese export ranked 32th in the world in 1978
• Chinese export ranked first in the world in 2010
China’s export commodities structure (1980-2010)
Products made in China account for the
share in international market
China’s ten big trade partners
Foreign Exchange Reserves
• The annual average growth rate of FER is
36.74% after 1978
• 3200 billion US dollars reserve by the end of
2011, ranks first in the world
improvement of people's living conditions
unit: yuan
Income of
Income of
Consumption of
Consumption of
farmer
urban resident
farmer
urban resident
1985
397.6
739.1
1.86
317.4
673.2
2.12
1990
686.3
1510.2
2.2
538.1
1278.9
2.4
1995
1577.7
4283.0
2.71
1310.4
3537.6
2.7
2000
2253.4
6280.0
2.79
1670.0
4998.0
2.99
2002
2475.6
7702.8
3.1
1834.3
6029.9
3.29
2004
2936.4
9421.6
3.21
2184.7
7182.1
3.29
3255.0
10493
3.22
2555.4
7942.9
3.11
5919
19109
3.23
4382
13471
3.07
year
The ratio
ratio
2005
2010
Comprehensive reform model on national income
distribution form (after 2003)
Abolishing agriculture taxes
• Abolishing 4 kinds of taxes of agriculture, including
agriculture tax, slaughter tax, animal husbandry tax and
special tax
• Abolishment of all these taxes releasing 133.5 billion
yuan of farmers’ burden
• Government increasing 60 billion yuan direct subsidies
A story
Mr li, A farmer , planted 5 acres of rice. Every year he
can get 350 yuan subsidies for planting from government
and net income of 2000 yuan from cultivating. He said, after
attending the countryside cooperation medical treatment,
he got 50% to 75% of reimbursement from medical fee, but
every year he only needs to deliver 10yuan. In addition, all
the study incidental expenses and book expenses are
exempted during the students’ compulsory education period.
Reading rooms are built in the villages. Drinking system and
public transportation are more convenient.
Contents
 China’s economic achievements from 1978
 Three stages of China’s R&O
•
Current situation of economy
•
Guideline of the 12th five-year plan(2011-2015)
•
Targets of the 12th five-year plan (2011-2015)
Three stages of China’s R&O
From planed economy to socialist market economy
• Stage 1: 1978 to 1992. Primary stage
• Stage 2: 1992 to 2001. Deepening stage
• Stage 3: 2001 to present. Opening up stage
Stage 1: 1978 to 1992. Primary stage
• Started from 1978, primary and experimental stage of
R&O
• Features of first stage:
Loosening and activating the economy
Clarifying different ideologies
Reform of commodity prices
Put the countryside reform first
Conflicting opinion
• Socialism or capitalism?
• Deng’s answers:
No arguments about S&C. Market economy does not
stand for capitalism
No matter white or black cat, the one who catches
the rats are good cats
Cross the river by groping the stone
Reform of prices
• Under planed economy, most commodity prices are
under control, even a match
• Then changed to two-track price mechanism
• Nowadays more than 90% prices are determined by
the market
• Some important prices are still under control
Electricity, petroleum, coal, interest rate, etc
Put the countryside reform first
1.1 The household contract responsibility system
•
Inspiring the enthusiasm of Chinese farmers
•
Making tremendous achievements in the rural economy
•
Combining family income with production investment
•
Decreasing the cost of supervision and management
•
The peasants getting decision-making power for their
production
Put the countryside reform first
• From1978 to1984, the annual average growth rate of agriculture
output was 7.7%
• From 1978 to1984, the total value of agriculture output
increased 42.23%, half of which from the high efficiency of
household contract responsibility system
A story
Thirty years ago, Mr Li, an old
farmer in Jiangxi Province, used a
tractor to take his bride home.
When his son got married a couple
of years ago, he rented ten
luxurious cars on his wedding day.
The old farmer said: “it is really like
a dream”.
Put the countryside reform first
1.2 Developing the role of local governments
• Loosening the regulation of the household registration system
• Guiding the orderly flow of the labor force between urban and
rural areas or between regions
• Promoting the transfer of surplus agricultural labor
• City expansion enhancing development of property
Stage 2: 1992 to 2001. Deepening stage
• In 1992, Deng Xiaoping pointed out
the direction of China: socialist
market economy . The reform and
opening up deepened
Case of SOEs reform
• Initially give more freedom, rights and
profits to SOEs
• Keeping big enterprises and sell shares of
mid and small firms, more than 90% are
partly or completely private owned
Reform of big enterprises
• Only big SOEs are kept, aiming at maintaining
national pillar industries. Trying to support
internationally competitive big enterprises. Now 43
enterprises in world top 500
• Change from state-owned to multi ownership:
private capital, foreign capital, etc
• 159 big enterprises are under control of central
government, aiming at restructuring them into 80100
Reform of big enterprises
• Only big SOEs are kept, aiming at maintaining
national pillar industries. Trying to support
internationally competitive big enterprises. Now 18
enterprises in world top 500
• Change from state-owned to multi ownership:
private capital, foreign capital, etc
• 159 big enterprises are under control of central
government, aiming at restructuring them into 80100
Development of private economy
• The ratio of private economy to GDP was only 42.8% in
2000, increased to 65% by the end of 2005.
• The employment of private economy in urban areas
increased from 65% in 2000 to 75% in 2005
• Private economy is more flexible and innovative,
occupies the competitive fields
Main products: manufacturing,light industry products
Stage 3: 2001 to present. Opening up stage
• In November 2001, entry WTO; in November 2006, 5-year
transitional period ended. China is fully opened up, a new era
comes
• China is now an inseparable part of global economy. It is like a
swimmer swimming from a pool to the sea. Challenges and
opportunities are coming together
Challenges: competition from global competitors
Opportunities: bigger market, more profit, and risk
diversifying
Legislative build-up
Review of over 2500 laws and regulations, abolished
840, amended nearly 400, to keep in line with WTO rules;
Over 40 new legislations on opening up sectors in
service trade sector covering: banking, accounting,
legal service, insurance, logistics, commerce,
telecommunications, architecture, tourist,
transportation, etc.;
More transparency, simplification on administrative
procedures;
Market Access
62.5% of service areas, extend of openness
close to that of developed countries.
Areas commented: banking, insurance,
securities, telecom service, distribution, etc. A
few limitations in telecommunication, audiovideo, construction, financial and legal
services.
the contribution of Different enterprises in trade volume
民营企业等6%
外资企业
51%
2001年
国有企业
43%
民营企业等
25%
国有企业
20%
外资企业
55%
2010年
From 1980’s to 1990’s,
the open policy
focused on coastal
regions
In the 1990’s, China
opened and
developed
Shanghai Pudong
New Area
In 2000, the 10th
“Five Year Plan” ,
the strategy of
“developing the
western region”
In 2001, China became
a member of WTO
Experience 1. Socialist market economy
• Breaking the doctrine of socialism conflicted
with market economy
• From planned economy to market economy
• Inspiring everyone’ s potential
Experience 2.Put countryside reform first
• Countryside population accounting for the
majority
• From traditional agricultural society to
industrial society
• Three stages of reform: land system reform,
price reform, and comprehensive reform
Experience 3. Opening up
• Taking the chance of globalization
• From close economy to open economy
• Making up for insufficiency of capital
• Alleviating the employment burden
• Enhancing reform pace
Experience 4. Gradual reform
• Keeping good balance in reform,
development and stability
• From the bottom to the top
• From the point to the line , then to the wide
area
• From the experimental area to the whole
country
Contents
 China’s economic achievements from 1978
 Three stages of China’s R&O
 Current situation of economy
•
Guiding concept of the 12th five-year plan
•
Targets of the 12th five-year plan
Current situation of economy
1. Economic strength has improved a lot, however,
there is no dramatic change in structural imbalance
and extensive mode of growth
• Economic growth mainly depends on industry, agriculture as the
foundation of the economy is still very weak. Living on the
nature in some places is still very common. Contribution made
by agricultural science is still very low.
• Economic growth depends heavily on physical resource
investment and cheap labour.
• Weak in independent innovation , lack of core technology,
insufficient famous brands.
The ratio of the three industries from
1978 to 2008年（%）
Energy consumption ration in 3 industries from
1980 to 2008
Innovation
and R&D
Processing and
assembling
Branding
According to the statistics, in ten big textile products in the world ,
the cost of china’s labor is 0.62 $/hour, this figure is only ¼ of
Korea, 1/13 of USA, 1/16 of Italy, and 1/20 of Japan
Current situation of economy
2. Imbalance between urban and rural areas
• Since the opening-up policy, China’s urbanization increased from
17.9% to 46.6%,10 million rural residents become urban residents per
year. however, the level of China’s urbanization is far behind the world
average level.
• The annual average net income per capita for rural residents is 5153
yuan, which is less than one third of urban residents.
The progress of China’s urbanization
2005
2006
2007
2008
2009
2015
2035
中国
40.4%
41.3%
42.2%
43.1%
46.6%
52.0%
65.0%
美国
80.8%
81.1%
81.4%
81.7%
英国
89.7%
89.8%
89.9%
89.9%
法国
76.7%
76.9%
77.1%
77.4%
德国
73.4%
73.5%
73.6%
73.6%
日本
66.0%
66.2%
66.3%
66.5%
澳洲
88.2%
88.4%
88.6%
88.7%
俄罗斯
72.9%
72.9%
72.9%
72.8%
巴西
84.2%
84.7%
85.1%
85.6%
印度
28.7%
29.0%
29.3%
29.5%
Current situation of economy
3. Regional differences
• Since the national strategy to develop the western part of China
was implemented in 2000, western provinces has had an
average annual GDP growth of 12%. Although this figure is
1.8% higher than the whole country ‘s average level, GDP per
capita in the most undeveloped areas in the west is only one
tenth of that in the coastal area.
• In 2008, urbanization reached 56% in eastern area, but in
central and western area it was 43% and 38% respectively.
In the 11th Five Year Plan, economy in eastern areas in
China accounts for a big proportion in China
中國經濟規模區域佔比
100%
90%
31.1
30.9
80%
33.2
33.5
33.1
70%
60%
50%
40%
69.1
68.9
66.5
66.8
30%
66.9
20%
10%
東部佔比
中西部佔比
2009
2008
2007
2006
2005
0%
FDI distribution among areas （by the end of 2008）
Share of each area in
Contractual capital
Share of each area in
number of projects
Eastern area 87%
Central area 8%
Western area 5%
Share of each area in actual
foreign investment
Eastern area 83%
Central area 11%
Western area 6%
Easternarea
area86%
86%
Eastern
Centralarea
area9%
9%
Central
Westernarea
area5%
5%
Western
Current situation of economy
4. People’s
living standards are high, but there is still
huge poverty and low income
• GDP per capita ranks the 99th in the world
• There are still 150 million people who live on less
than 1 US dollar a day, 40 million rural residents still
have not solved the basic problems of food and
clothing, 23 million urban residents live at minimum
subsistence level
Current situation of economy
Three advantages
1.Great potential for urbanization
Current situation of society and economy
Three advantages
2. Huge domestic consumer market
Current situation of society and economy
Three advantages
3. Strong in capital, labor and technology

GDP : 5879.1 billion US$ in 2010

Total volume of export and import :2972.7 billion US$ in 2010

Foreign exchange reserves: 3000 billion US$

The total output of grain : over 546 million tons
Contents
 China’s economic achievements from 1978
 Three stages of China’s R&O
 Current situation of economy
 Guiding concept of the 12th five-year plan
•
Targets of the 12th five-year plan
Guiding concept of the 12th five-year plan
• Subject：scientific development
• Mainstream: improving the transformation of
the mode of economic development
• Highlight : improving people's living standards
Basic requirements for improving the transformation of
the mode of economic development
• Strategic adjustment of the economic structure as main thrust
• Advancement and innovation of science and technology as the
important support
• Ensuring well-being of the people and improving their lives as
the means and ends
• Resource-conservation and environment-friendly society as
the acting points
• Reform and opening up as the strong driving force
Strategic adjustment of the economic structure
• Increasing domestic demand , thus, consumption, investment
and export will be coordinated to boost economic growth
• Adjusting industry structure. Improving manufacturing core
competence ,developing emerging industry , picking up the
development of service industry ,thus, agriculture, industry and
service will be coordinated to boost economic growth
• Adjusting regional structure.
Strategic adjustment of the economic structure
60
10
8
50
6
40
4
30
2
0
20
-2
10
Savings and investment rate in China (1978－2005)
2006年
2004年
2002年
2000年
1998年
1996年
1994年
1992年
1990年
1988年
1986年
1984年
1982年
1980年
1978年
0
-4
-6
净出
口率
储蓄
率
投资
率
Surplus in balance of payment
• Surplus of current account ：export >import
• Surplus of capital account：inviting FDI > outward investment
• Surplus of current account + Surplus of capital account =
increase in foreign exchange reserves (error and
omissions excepted）
• Saving-Investment = Export-Import
Regional adjustment policies are beneficial to
shortening income difference
20000
14,000
18000
12,000
16000
10,000
14000
12000
8,000
10000
6,000
8000
6000
4,000
4000
2,000
2000
0
2005
2006
2007
2008
2009
城鄉人均可支配收入差距(RMB,R)
7,238
8,132
9,645
11,020
12,021
城鎮人均可支配收入(RMB,L)
10,493
11,760
13,786
15,781
17,175
鄉村人均可支配收入(RMB,L)
3,255
3,587
4,140
4,761
5,153
0
Contents
 China’s economic achievements from 1978
 Three stages of China’s R&O
 Current situation of economy
 Guiding concept of the 12th five-year plan
 Targets of the 12th five-year plan
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;
• Price to remain generally stable.
Economic restructuring
• Increase in domestic consumption;
• Breakthrough in emerging strategic industries;
• Value-added output in the service sector to account
for 47 percent of GDP, up 4 percentage points;
• Urbanization rate to reach 51.5 percent, 4 percent
higher.
Environmentally friendly & 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;
• Energy consumption per unit of GDP to be cut by 16 percent;
• Carbon dioxide emission per unit of GDP to be cut by 17
percent;
• Forest coverage rate to rise to 21.66 percent and forest stock to
increase by 600 million cubic meters;
Comparison in the structure of primary energy consumption
2000年消费总量构成
23.2%
2.4% 6.7%
67.8%
2008年消费总量构成
18%
原煤
石油
天然气
水核风电
3.4% 10%
68.6%
原煤
石油
天然气
水核风电
Livelihood
• Population to be no larger than 1.39 billion;
• Life expectation to increase by one year, reaching
74.5 years on average;
• Rural cooperative medical service to cover all rural
residents , Basic endowment insurance to cover 357
million urban residents;
• Construction and renovation of 36 million
apartments for low-income families.
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2.First stage
• Started from 1978, primary and experimental stage of
R&O
• Features of first stage:
Loosening and activating the economy
Clarifying different ideologies
Reform of commodity prices
Primary steps of SOEs reform