China＇s Economy in 2005： At a New Turning Point and Need to Fix Its Development Problems

I. High Growth, Higher Stakes China’s economy in 2005 experienced another year of surging growth, with its total GDP(based on recent revision) expanding at 9.9 percent to reach 18.23 tn yuan (US$2.26 tn).1 Growth in 2005 was slightly lower than the 10.1 percent in 2004; but it was nonetheless very high. Sustained high growth is accompanied by potential high risks, and it inevitably raises the issue of future sustainability of high growth. Although the Chinese economic policy-makers in 200…

China's Economy in 2005: At a New Turning Point and Need to Fix Its Development Problems

Cina's economy in 2005 chalked up another year of 9.9 percent surging growth. In 2005 the government's attention was focused on the many negative consequences of China's past unbridled economic growth, from rural poverty to environmental degradation and wide income disparities, calling for more “sustainable growth” or “balanced development”. The new development paradigm fit nicely into President Hu Jintao's concept of “scientific development”, and was embraced by the 11th Five‐Year Program (2006 ‐ 2010). The year 2006 might go down in China's economic history as an important turning point, as the Hu‐Wen leadership will start new development strategies to fix problems previously associated with strong economic growth. Strictly speaking, many of China's “growth problems”, from regional disparities to environmental degradation, are actually quite inevitable ‐ as apart of the development process. But their gravity has often been aggravated by poor governance, blatantly pro‐growth policies, and local corruption. Overall, the Chinese leadership has come to realize that its past development patterns are physically unsustainable, and politically and socially unacceptable. It has embraced the need to change. But all development changes will take a long time to yield concrete results. Edited by Xiaoming Feng