Testing times for G20 leaders
http://europe.chinadaily.com.cn/business/2013-09/05/content_16945668.htm
Though charting a course for global economic recovery and
bolstering investor sentiment would be high on the agenda of global leaders
during the Group of Twenty summit in St Petersburg, Russia, attention would
also be drawn on how China, the world's second largest economy, is combating
slower growth.
The meeting, which comes at a time when the currencies of
all participating nations, barring China,
have taken a major hit, will also be an important platform for Chinese President
Xi Jinping to reassure the global community that the economic climate and
growth pipeline still remains robust in China, experts say.
"China
is way ahead of other economies in competitiveness and productivity, and still
has the best credentials for sustained long-term growth," says Gregory
Chin, associate professor of political economics at York
University in Canada.
Xi, is expected to reassure global leaders that the recent
growth blips are part of an industrial transformation and not a sign of waning
confidence. He will also use the opportunity to assure global leaders that China will come
out with more policies to facilitate long-term growth.
At the same time, Xi, will also be an active participant in
the global deliberations aimed at restoring investor confidence and making the
current international trade, investment and financial system more fair, open
and inclusive. The discussions are also expected to touch upon the plans by the
US Federal Reserve to wind down its quantitative easing program and its
resultant impact on other nations.
Chin, who has tracked several G20 summits in the past, says
that President Xi will bring a "new spirit of boldness" to the
meeting.
"The challenging world conditions and even tensions
within the Asian region are prompting the Chinese leadership to take bold,
careful and calculated global measures," says Chin, a Chinese-Canadian
scholar who specializes in evolving global governance and China's role.
"I expect this new spirit of boldness to continue at
the G20 level also."
Chin says that Xi has been at the forefront of several
recent important global engagements like the recent US-China Strategic and
Economic Dialogue. "The close interaction shared by the two presidents
during that meeting is an example of the new thinking in Chinese foreign
policy. State Councilor Yang Jiechi's recent remarks about the need for a
"new diplomacy" for China
also highlights the new boldness," he says.
Based on his observations, Chin expects Xi to focus on
encouraging growth in the world economy, and also on securing financial
stability, international banking and other related financial reforms to enhance
the role of emerging economies in the system.
Chinese Banks in Europe
http://europe.chinadaily.com.cn/europe/cnbanksineuro/index.html
Plenum offers new platform for urbanization
http://usa.chinadaily.com.cn/china/2013-11/07/content_17086511.htm
The Third Plenum of the 18th Central Committee of the
Communist Party of China may be a good opportunity to push the country's
ambitious urbanization bid — a major effort to change the development model of
the world's second-largest economy.
The CPC's new leadership designated urbanization as a growth
point of the economy and called for quality and new urbanization at its
economic work conference in December, after China's exports were adversely
affected by the lingering global crisis.
China's
urbanization ratio hit 52.57 percent in 2012, increasing almost 1 percentage
point each year from 17.9 percent in 1978. The per capita gross domestic
product was about $6,102 in 2012. The steady and rapid urbanization seems
sustainable for awhile along with the economic growth.
However, only 27 percent of the national population has
urban hukou, or household registration, with which residential welfare is
affiliated. More than 300 million migrant workers have lived in cities without
hukou.
Although China
has established a basic social security network nationwide, the welfare gap
between an urban hukou holder and a farmer remains so large that local
governments cannot afford to offer all migrant workers hukou in a short time.
After the central government abolished the agriculture tax
in 2006, some migrant workers decided they would leave their small plots
uncultivated at home rather than rent them out because of the absence of a
functional land transfer market.
China's
urbanization has been propelled by the artificial divide between urban and
rural areas. The hukou system, which establishes the agricultural population's
inferior position, is the main barrier to healthy urbanization in China.
Some local governments stress only urbanization as an
immediate statistical driving force of economic growth, ignoring the necessary
conditions of quality urbanization, such as the innovation and equalization of
public services.
Gao Guoli, an economic researcher with the National
Development and Reform Commission, pointed out recently that China's
urbanization demonstrates three characteristics: slow industrialization, fast
land urbanization and the prioritization of speed over quality.
China
should draw lessons from Latin American countries, whose urbanization ratio is
79.6 percent, much higher than the 72.08 percent of Europe.
But the industrialization of these countries is much lower than that of
European countries. Poor people flood into cities and create new villages
there.
In contrast, the United States' urbanization ratio
of 85 percent is based on the coordinated development of agriculture and
industry.
The Third Plenum is expected to instill in officials of
various levels a sense that urbanization should not be regarded as an
artificial means to boost domestic consumption, but as a necessary result of
advancement of production efficiency in both agriculture and industry.
Right direction needed
"The next decade will be a crucial stage for China's urbanization," said Zhang Monan, an
economy researcher with the State
Information Center.
"The investment on China's Keynes-style urbanization
cannot necessarily ensure sustainable GDP growth. The fundamental influence of
urbanization does not lie in expanding demand at home but increasing the
effects of economies of scale, labor distribution and cooperation."
Hopefully, this plenum will specify the direction of
relevant reforms and make breakthroughs in coordinating the efforts of
different ministries and local governments.
The National Development and Reform Commission disclosed in
June that the Chinese government will transform rural residents fitting certain
criteria into urban residents by lifting the hukou control of all small cities
and towns, easing the limits on the hukou of middle-level cities in an orderly
way, gradually lowering the conditions for hukou in big cities and prudently
designing the conditions for applying a hukou in the largest cities.
Thus, local governments of small and middle-level cities
will have to find new revenue sources to pay for the rising welfare costs.
The local urbanization of small and middle-level cities is
an important channel not only to ease the population pressure on the largest
cities in China,
but also to boost balanced development of industry and the job market across
the country.
In China
there are 2,816 small and middle-level cities with a population smaller than 1
million. These cities and towns account for 84.5 percent of the national
economy.
Recent research of the Beijing-based Northeast Asia
Development Research Institute shows that China's urbanization ratio of small
and middle-level cities is only 35.1 percent.
Zheng Xinli, a researcher in the Beijing-based China Center
for International Economic Exchanges, said: "Whether the welfare gap
between farmers and big-city residents can be filled in the next 10 to 20 years
depends on the economic development of counties and small and medium-sized
cities."
"If the urbanization ratio of the small and
medium-sized cities can reach about 50 percent, they will make a powerful
contribution to the reasonable growth of the quality national urbanization
ratio," he added.
liyang@chinadaily.com.cn