China’s farsightedness

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China’s farsightedness

Seven has been a lucky number for Li Keqiang, China’s first premier with an economics doctorate. He was born in July 1955, the year’s seventh month, and entered Peking University in 1977. At the age of 47, he became the provincial governor of Henan and served there for seven years. He gained membership to the mighty Politburo Standing Committee at the 17th Party Congress in Oct. 2007. In 2012, he became one of the seven newly elected members of the Politburo Standing Committee. In 2013, he became the seventh prime minister of China at the age of 57.

Li, who took the helm of the world’s second largest economy at a challenging time, set a target for China’s growth for 2015 at around 7 percent. Chinese gross domestic product grew at a 7 percent rate in the second quarter. The West raised a worried fuss about the faster-than-expected slowdown, exacerbated by the bursting of China’s stock market bubble. They may not be exaggerating, given the fact that the economy has slowed substantially from an over 12 percent growth pace in 2009.

China, however, remains calm. There is no news of stimuli action to prop up growth. Beijing has its reasons. Its GDP of $10.4 trillion is tantamount to the U.S. GDP from 2002. China accounts for about 14 percent of the global GDP, the same share Japan commanded in its peak year of 1997 when it was the world’s second largest economy. The U.S. economy grew in the 3 percent range in 2002 with Japan in the 2 percent range in 1997.

China argues that its growth far outpaces the economies of the U.S. and Japan when they were a similar size. The United States has a population of 350 million and Japan 150 million. China is a country of 1.38 billion. A country of such colossal size expanding by 7 percent annually is like an enormous aircraft carrier sailing at the speed of a jet plane.

When an economy grows by 7.2 percent annually for a decade, it can double in 10 years. China’s GDP was a half of the U.S.’s in 2012. It is now about 60 percent the size of the U.S. economy. If the Chinese can keep growth at a 7 percent pace and its currency appreciates at the U.S. growth rate of about 2 to 3 percent annually, China would outpace the U.S. in GDP dollar terms by 2022.

China’s seventh premier could retire with honor after earning the crown of sustaining China’s GDP. Beijing’s growth target is hardly a modest one. It has the potential of outperforming the U.S. in seven years. That is why Beijing can brush aside all the worries abroad about the country’s economy.

The country has two major long-term designs. It has road maps for national rebuilding by 2020, when the country will be celebrating the 100th anniversary of the Communist Party’s founding, and by 2050, the 100th anniversary of the government’s founding. They are dubbed “two century blueprints.”

China sets higher goals for a half century, each decade and each five years for specific action plans. Chinese policies maintain consistency because they are drawn up in a comprehensive and farsighted context with a set time frame. Regardless of who becomes president and premier every 10 years - every five terms can be extended for another five - the national goal for the next century remains intact. A national vision is designed for every century and a leader rules for a decade. Chinese power can be feared because of such farsighted designs and leadership structures.

The West takes pride in its democratic system, the separation of powers and free elections. But in reality, that has proven any more constructive than the socialist system. Both the rich and poorer countries in the Western Hemisphere are up against political challenges because of election seasons that come around every four to five years, often contested by greedy politicians who care more about their selfish ambitions than the public or national needs.

Chinese leaders are groomed for more than 20 years in provinces to gain experience governing a community with populations of more than 100 million. When they move to the central stage, they assist the presidents for more than five years as deputies before they can move into the top executive positions.

Chinese leaders need not fret over gaining immediate results. Their role is to achieve 10 percent of the century-long design. A decade is long enough to fill a chapter in history. The year 2015 would be the end of a 12th five-year plan. Chinese policy makers will unveil the 13th five-year development plan, a mid-term national goal for 2020, in the fifth plenary session of the 18th Community Party Convention in October. Considering the country’s growth potential of 6.7 percent to 7.7 percent, China will likely set growth targets of around 7 percent for the next five years.

In the 16th party convention in 2005, China had envisioned the economy would double its size by 2020 from 2010. China is expected to announce the next design for the economy running up to 2030. The world will be watching what China’s plans are for the next 15 years under the man known for his lucky sevens.

Translation by the Korea JoongAng Daily staff.

JoongAng Sunday, July 26, Page 19

*The author is the director of the China Economy and Finance Research Institute.

by Jeon Byeong-seo

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