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Grappling with the 'Success Trap' in China

T he rapid growth of China over the past three decades has brought about a remarkable economic transformation. It has also brought with it major problems, a "success trap" of a certain kind. The 17th congress of the Communist Party of China focused on how to climb out of this trap.

COMMENTARY

Grappling with the ‘Success Trap’ in China

Manoranjan Mohanty

The rapid growth of China over the past three decades has brought about a remarkable economic transformation. It has also brought with it major problems, a “success trap” of a certain kind. The 17th congress of the Communist Party of China focused on how to climb out of this trap.

T
he 17th congress of the Communist Party of China (CPC) which concluded its week-long session on October 21 not only took stock of the many successes China has achieved in the course of three decades of reforms, but paid greater attention to the problems which had arisen in that process. In general secretary Hu Jintao’s report these issues were squarely stated and a new perspective called “Scientific Outlook on Development” was articu lated as a way out of the dilemmas facing the party and the country today. This was incorporated into the CPC constitution according it a status of a guiding principle. Not only was its application to the main policy areas elaborated, a new central com mittee was elected by the congress whose members were selected through a year-long process of investigation on their com mitment to pursue scientific development.

Indeed China has accomplished remarkable economic growth since 1978, having quadrupled the per capita national income of 1980 by 2001 and emerging as the world’s fourth largest economy at present. The living standards of the Chinese people have considerably improved and the urban infrastructure in many cities compares with the best anywhere. The rise of China is talked about the world over because of its high rate of growth and increasing influence in world affairs. But this very success seems to have led China to a series of social, economic and poli tical dilemmas which are not easy to solve. The mode of economic growth has been such that it has created its own momentum, powerful production structures and strong interest groups which have longterm domestic and international commitments. Yet social inequality, regional disparity, environmental degradation and political alienation are growing at such a rate that the prevailing course of development needs urgent reorientation. This is the “success trap” in which China is placedat this current historical conjuncture.

Undoubtedly, China has achieved enormous successes, but the manner in which they have been achieved has led it to a trap. The main course of development cannot be reversed, yet the problems have to be addressed.

The significance of the 17th congress lies in the fact that there is a realisation of the magnitude of the crisis and a serious attempt has been launched to get out of the trap. This has been done by shifting the focus from economic growth to “scientific development” that stresses social equity and sustainable development along with growth.

What Is Scientific Development? The choice of the word, “scientific” in this formulation does not imply the common sense meaning that would denote a path of development using modern science and technology, even though that is also included in the overall understanding of this concept. This is more in the sense of a scientific perspective that is based on actual experience, considered with care, objectivity, historical knowledge and material evidence. Hu Jintao first mentioned this concept during a visit to Guangdong province during the outbreak of SARS in April 2003 when he asked people to pay attention to a harmonious develop ment of economy and society and to sustainable and all-round development. Thereafter, the concept gradually appeared in party forums. Hu dwelt upon the perspective at length in his pre-congress ideological session at a national conference of party leaders at the central party school on June 25, 2007, linking it with the concept of building a “harmonious society” and “putting people first” in all aspects of work. In the report to the congress Hu defines it thus:

The scientific outlook on development takes

development as its essence, putting people

first as its core, comprehensive, balanced

and sustainable development as its basic re

quirement, and overall consideration as its

fundamental approach.

This perspective arises from the realisation of serious problems existing in contemporary China. Hu Jintao says that “while recognising our achievement, we must be well aware that they still fall short of expectations of people”. Listing the main difficulties and problems, he says that “our economic growth has been realised at an

Economic & Political Weekly november 3, 2007

COMMENTARY

excessively high cost of resour ces and environment and the imbalance in development between urban and rural areas, between regions and between economy and society”. Speaking of the crisis facing the farmers he says: “It has become more difficult to bring about a steady growth of agriculture and farmers’ incomes”. There are problems affecting the immediate interests of people relating to “employment, social security, income distribution, education, public health, housing, work safety, administration of justice and public order and difficult life faced by low income people”. There is much empi rical evidence to substantiate the seriousness of these problems. The fact that the officially confirmed reports of incidents of mass protest increased from 76,000 in 2004 and 87,000 in 2005 to 1,20,000 in 2006 is a small indication of this situation.

Harmonious Socialist Society These problems are the cause of disharmony and tensions in society. Therefore Hu Jintao has proposed a new set of policies embodied in this scientific outlook on development to achieve the goal of a “Harmonious Socialist Society” – a goal that was articulated systematically at the sixth plenum of the central committee in 2006 and has now found a place in the CPC constitution. The 16th party congress in 2002 when Hu Jintao succeeded Jiang Zemin gave the slogan of building a “moderately well off society” by 2020 with a target of quadrupling the GDP. The same goal has been reiterated but with the affirmation of – “a moderately well off society in an all-round way”.

Even the growth target has been put in a new perspective of quadrupling the per capita GDP by 2020, not just the absolute volume. Read together with the statement that “development is for the people, by the people and with the people sharing in its fruits” the new perspective certainly amounts to more than the World Bank slogan of “inclusive growth” at least in theoretical terms. Whether the theory makes only symbolic accommodation of the sociopolitical and environmental challenges, while the market economy maintains its speedy growth because of the very nature of the success trap, only practice will show.

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However the current CPC leadership has clearly made a break with the strategy of breakneck growth that has characterised the past 20 years. It has done so using the familiar method of creatively adapting to the concrete conditions of the changing times. Mao Zedong did it to formulate the theory of people’s democratic revolution. Deng Xiaoping called for “emancipation of mind” to break with Mao’s ideas on building socialism. Now Hu Jintao has launched the campaign for a balanced development also by calling for “emancipation of mind”. Right in the beginning of the report Hu says: “emancipating the mind is a magic instrument (a familiar term again) for developing socialism with Chinese characteristics”. Through this process the current leadership has added “scientific outlook on development” to the party constitution after Marxism-Leninism-Mao Zedong Thought, Deng Xiaoping Theory and the Important Thought of Three Represents (Jiang Zemin’s formulation), showing its serious commitment to the new policies. As practice shows, the latest formulation is the main guide to current policies.

november 3, 2007 Economic & Political Weekly

COMMENTARY

The “reforms and open door” policy has been reiterated as it has been responsible for China’s rapid development and Hu said to stop or reverse that “would only lead to a blind alley”. But there is again and again the mention of overall arrangement of an “all-round economic, political, cultural and social development, balance relations of production with the productive forces and the superstructure with the economic base”. In other words, the excessive focus on the economic base may have caused the present problems. That is why the notion of five balances has been stressed. A mechanism will be set up to formulate poli cies and monitor them to reduce the urban-rural gap and regional disparities. Hu has given a call for promoting the capacity for independent innovation and turning China into an “innovative nation” where scientific and technological in novation is constantly pursued to promote a resource saving and environment friendly and equi table process of development. For this purpose already a national programme for 20062020 has been announced.

Coordinated Transition An important decision has been made to bring about transitions in three dimensions of the economy: from relying on mainly investment and export to relying on a well-coordinated combination of consumption, investment and exports, from secondary industry serving as the major driving force to primary, secondary and tertiary industries jointly driving economic growth and from relying heavily on consumption of material resources to relying mainly on advances of science and technology, improvement of the qua lity of workforce and innovation of management. If these transitions indeed take place in China, then the mainstream economic model that has been propagated since the western industrial revolution and the technological revolution of building a “knowledge society” will be substantially challenged.

The definition of modernisation to mean moving from agriculture to industry and then to a service economy is replaced with the notion of comprehensive development. Indeed, China already saw the pitfalls of that strategy by neglecting the rural economy from the early 1990s and focusing on export-led growth.

Building a new socialist countryside has now been declared as the “top prio rity in the work of the whole party”. The “three rural problems” – low productivity in agriculture, low income of farmers and low level infrastructure and social facilities in the countryside – have been the subject of close attention during the last four years. Abolition of agricultural tax and many other rural fees have reduced the peasant burden. Many new policies have been announced as a new package to develop the rural eco nomy, including developing the enterprises which were the backbone of rural prosperity in the 1980s. For reducing regional imbalances, in addition to the “Western Region Development Strategy”, new programmes for the north-eastern region – an old industrial base built during Japanese occupation and the central region surroun ding Wuhan have been announ ced.

The plan is to build several economic rims cutting across provinces and also to develop areas with developed cities as growth poles. One of the most talked about themes in today’s China is Hu Jintao’s call for spreading a new “conservation culture” and building an energy and environment responsibility system like the production responsibility system based on incentives and disincentives that spurred economic growth during the past three decades. Hu cited the experiences of last year when two great lakes of China Dongting and Taihu were so polluted that the former affected the Yangze river’s water in a big stretch of land and the latter led to the suspension of water supply to Wuxi for two weeks. The many mining incidents have been a matter of shame for China. China’s carbon emission continues to grow and is a matter of worldwide concern.

Democracy and Leadership “People’s democracy is the lifeblood of socialism”, declares Hu Jintao. Yet the institutional changes in the direction of building a participatory system of self-governance are very few. The one-party rule through people’s congresses and a consultative role for the non-communist parties continues to be the pattern. Association of noncommunist experts is expanding steadily, including as central ministers. Competitive multi-candidate elections by secret ballot, which was introduced at the village committee level in 1998 however remains the only one of that kind. There is no indication that the present leadership wishes to raise it to the next level (township) in the near future, though more and more cases of townships having competitive elections without intervention are visible.

But Hu Jintao has given a sense of expanded inner-party democracy. The selection of over 2200 delegates to the 17th party congress and the election of 204 members and 167 alternates of the central committee (CC) and 127 members of the central commission of discipline and inspection involved a wider consultation and elimination process. The first list of CC candidates had 8 per cent more names and it involved five rounds of elections to get at the final number that was ultimately voted by the congress. The same goes for the election of the new politburo which has 25 members.

The nine-member standing committee of the politburo retains the five top leaders: Hu Jintao re-elected as the general secretary, Wu Bangguo (chair of the national people’s congress standing committee), premier Wen Jiabao, Jia Qinglin (head of the CPPCC, the united front organ) and Li Changchun, the ideology and publicity in-charge. The retirement of vice-president Zeng Qinghong has been regarded as dropping of a rival of Hu. But Hu Jintao has been leading a collective leadership anyway. The four new members include two possible successors to Hu and Wen in 2012: Shanghai party secretary Xi Jinping (aged 54), Liaoning party secretary Li Keqiang (52), He Guoqiang (63), head of the CPC organisation department and Zhou Yongkang (64), minister of public security.

The new leadership has taken office on the plank of ushering in a new set of policies centering on equitable and sustainable development, proving a clean and peoplefriendly administration sparing no efforts to fight corruption and following the same policies on international affairs with a new slogan of building a harmonious world. Whether they will succeed in getting out of the success trap and indeed create material, cultural and political conditions for a harmonious socialist society, only time will tell.

Email: dr_mohanty@yahoo.com

Economic & Political Weekly november 3, 2007

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