OPINION> Commentary
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OPINION> Commentary
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Much more to consider than economic growth
By Lau Nai-keung (China Daily)
Updated: 2009-02-19 07:46 The Year of the Ox will prove to the world once again the resilience of the Chinese economy, and will perhaps dispel once and for all any misgivings about the success of its unique model of development. Putting aside this non-question of whether China will attain its target growth rate of eight percent, which it certainly will, there remains a more stringent requirement: we need good GDP growth not toxic GDP growth. No 1 on the list of criteria is cleanliness, and we want to prevent corruption arising from a huge injection of liquidity into the system to boost growth. Many projects that may be immature or even redundant are likely to be commissioned in a hurry without going through proper planning and scrutiny, and the supervision of their execution might be somewhat sloppy. This is fertile ground for corruption. Announcing the stimulus package of $586 billion, Premier Wen Jiabao stressed the utmost importance of public scrutiny and monitoring, but on the whole, our society still lacks the institutional framework and the tradition of doing so. As a result, some put high hopes on the Internet, which has recently helped expose some scandals. Cyberspace is however known for its anonymity and unprofessionalism. Like all power, if totally unchecked, it will inevitably lead to abuse. Secondly, GDP growth has to be green. We human beings have been ruining the environment for much too long now, and the whole planet is on the verge of an environmental breakdown. After years of fast track development without any regard to environmental side-effects, China is deeper into the crisis than many other countries. Put in GDP terms, it is estimated that more than three percent of our GDP is lost every year due to pollution. It is now common consensus that this is a price we cannot afford to pay, and it is also official policy that the environment is the bottom line that cannot be breached. On the regional level, however, many officials still cling to the old concept of economic growth at all costs. Because so much emphasis is being placed on economic growth this year, it is especially tempting to bypass the green baseline. It is high time to remind these officials that green and growth are not mutually exclusive, but are complementary. If we sincerely want economic growth, both short and long term, think green, conserve material, save energy and reduce carbon emissions. Invest in environmental conservation, and the return is going to be 100 fold. Thirdly, it has to be fair. Income disparity is not conducive to consumption. To induce more people to consume and push up the growth rate, we first of all have to empower them. We have to ensure more people will be gainfully employed, and do not have to worry too much about housing, education and medical expenses. This is a win-win situation. Once we have adjusted social imbalances, internal consumption will increase. Our factories will then gear up to employ more people and to produce more products and services. As more people spend, and spend more, more employment will be created. It will also create more profit for our commercial firms to be spent on research and development and technological upgrades. Subsequently, the stock market will perform better too. All these factors will contribute to strong growth.
Along this line of thinking, in the stimulus package, the government should invest more on social security, housing, education and medical and health; and on job creation in general, with a heavy bias towards the poorer regions and rural areas where the economic crisis has seen millions of migrant workers returning home jobless. The more well-to-do city folks surely would not mind, as they have been enjoying the fruits of economic development for a long time at the expense of the rest of the population. Selling electrical appliances to the rural areas at a discount is an example of good policy welcome by all. As Deng Xiaoping correctly observed, "Socialism is getting rich together". Should we deviate too much from this guideline, under-consumption as prevalent in the past few years will occur. To fill up capacity, our factories have to export their products at cut-throat prices and paper-thin profits. All we get in return is foreign exchange accumulation, most of which is in US Treasury bonds, now having lost half of their value due to devaluation of the US dollar, and a constant pressure for the appreciation of the yuan. This is clearly not worth it. Last, we want GDP that reflects general improvement. More of the same is not enough, and we want more of the better. GDP growth should encompass safer products of more advanced technology and innovation and better service. In particular, in line with the official policy of a frugal society, our products should be made more robust and long lasting. We have to always bear in mind that GDP growth is for the improvement of the general welfare of the people in their capacity as consumers. Under no circumstances should we tolerate substandard and unsafe products for the sake of a high growth figure. In good times, everybody moves ahead more or less at the same speed. Only during tough times can we separate the men from the boys. While the whole world is struggling hard just to achieve positive growth, we are fortunate to have other things to worry about. If we can satisfy the above objectives to a certain extent, China will emerge from the current economic crisis stronger than ever. The author is a member of the Hong Kong Special Administrative Region Basic Law Committee of the National People's Congress Standing Committee (China Daily 02/19/2009 page8) |
