A New Stage for the Chinese Economy

|China

Amid the maelstrom of the international monetary crisis originating in the United States, in November the Chinese government announced a large-scale economic stimulus package which will devote a total of more than 4 trillion yuan (approximately 57 trillion yen) to the end of 2010. This total corresponds to approximately 16% of GDP. Now China has come to sell itself as a “responsible major power” on behalf of the global economy also. This year there were the Beijing Olympics and the year after next there will be the Shanghai Expo. In that interval China must make one more effort. We have to push aside the transient rumors and irresponsible conclusions of the mass media, prepare ourselves and observe how China will develop in the future.

In retrospect, in the 30 years of the “Deng Xiaoping model” of “socialism which seeks riches”, that rejected the Mao Zedong era “socialism which tolerates poverty”, China has indeed grown rich. This was the achievement of Deng Xiaoping. People’s way of thinking has become multifaceted and lifestyles have diversified.

Above all the scale of the Chinese economy has become enormous in the 30 years of opening and reform. In addition, its drawing closer to the international economy has gradually heightened, and the impact which China’s economic power has had on the global economy has also become great. China was once called “the world’s factory”, but following accession to the WTO and with the widening of the relaxation of regulations domestically this has changed to “the world’s marketplace.” Recently with the promotion of BPO (business process outsourcing) it is also called “the world’s office.”

The “Deng Xiaoping model”, however, can be derided as “the banner is communist, what they say is communist, what they do is capitalist, and the ground is feudalist.” Disparities due to political involvement and a distorted distribution structure, founded upon a resource- and energy-guzzling industrial structure, have widened and a sense of social cohesion has been lost. This is the limitation of a socialist market economy.

What hasn’t been achieved? One thing is that a “people’s revolution” didn’t take root. Societal norms developed only within a relationship of “we will help the people who have fallen behind, and the people will have things done for them”, coming from the historic nature of the Communist Party of China—the so-called “under the vanguard of the Party principle.” A basis setting the relationship between the individual and the state on an equal footing has not been created. Another thing is that there hasn’t been an “industrial revolution.” Morality and rationality toward labor, a clear distinction between public and private, and innovation in businesses have not thrived. Therefore there is a delay in the branding of Chinese goods and companies.

The current situation in China can be thought to be entering a stage of economic crisis from pent-up societal contradictions. Faced with great structural changes the economy has also entered into a slowdown. For that very reason President Hu Jintao has emphasized “Hexie Shehui (Harmonious Society)”, and is attempting to change the current situation. While the slogan of a “Scientific Outlook on Development” is extolled, put simply it is the breaking with the get-rich-first “Deng Xiaoping model”, and the constructing of a new-stage “Hu Jintao model” which could be called a “socialism concerned about inequality.” This will probably be an ongoing move from a foreign-demand orientation to the spurring of domestic demand, and from high economic growth to a path of stable growth, with the balancing of economic growth and societal development being stressed.

[Translated by ERINA]