The concepts driving China's change

Updated: 2016-09-23 07:59

By Robert Lawrence Kuhn(China Daily Europe)

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Looking into the overarching strategy aimed at guiding nation's economic, social development

China's economy is in historic transition. Opportunities and challenges abound. China's problems are daunting: slower growth, social imbalances, industrial overcapacity, excessive debt, massive pollution - the list goes on.

How to address such diverse, complex issues?

The concepts driving China's change

China has an overarching, guiding strategy. According to President Xi Jinping, China's developmental model, going forward, will be driven by "innovation, coordination, green, openness and sharing". It's called the "five major development concepts".

Why these five concepts? How does each work? Why are they amalgamated? Why this order? Moreover, since each of the five concepts is already well known and commonly prescribed, why now this guiding, integrated strategy?

I address these questions in a series of six essays - this overview and one on each of the five concepts. They are based on six episodes of my TV show, Closer to China with R.L.Kuhn, on CCTV News, which tells the true story of China via China's thought leaders. These episodes are in turn based on a new book, Piloting China, published by the Party Building Book Publishing House of the Communist Party of China Central Committee Organization Department. In the book, which is designed for educating and training Party cadres and officials, the five major development concepts are explained in theory and illustrated in practice through real-world case studies.

The concepts driving China's change

Guided by the book, I traveled across China with our CCTV crew - east and west, urban and rural - to see how these five concepts are being implemented. It was an adventure. Following are introductions to the cases - each will be featured in a subsequent essay.

I was pleased to find "innovative development" in the top spot, the first of the five major development concepts. It signals that China's leaders appreciate the primary role of reform in the country's economic and social transformation. Reform requires change, change requires doing things differently, and doing things differently requires innovation.

I looked for two kinds of innovation: obviously in science and technology, but also in management and processes. I found both kinds at the Commercial Aircraft Corp of China, which is developing China's large commercial aircraft. I discussed the importance of innovation, and how innovation can be enhanced, with COMAC Chairman Jin Zhuanglong.

In order to optimize economic development, the efficient allocation of resources is essential. That's why "coordinated development" is the second development concept. While China recognizes that the market must play a decisive role, still there are issues, such as when provinces and cities compete with each other by developing similar industries. Other issues requiring coordination include how to integrate diverse regions and how to rebalance urban and rural areas.

A national example of coordinated development is Luzhou city in Southwest China's Sichuan province. I met the mayor of Luzhou, Liu Qiang, who explained how Luzhou is being transformed from a center for liquor (baijiu) into a prime coordinating center in the Yangtze River Economic Belt.

Pollution has become a scourge in China, the debilitating consequence of rapid industrial development. Chinese people are exceedingly displeased to see their air, water and soil so polluted, and the Chinese government has responded by elevating "green development", the third development concept, to highest national importance.

One of the pioneers has been Zhejiang province, where in 2005 Xi, then Zhejiang Party secretary, famously said: "Clear waters and green mountains are mountains of gold and silver." Putting the theory into practice, Zhejiang has pioneered an "eco-compensation" system, which enables regions to both preserve the environment and develop eco-friendly industries. I asked the Party secretaries of three Zhejiang counties (Anji, Chun'an and Kaihua) to explain how the eco-compensation system works.

I've been visiting China since the late 1980s and I bear witness to China's historic development. Catalyzed by the country's reform and opening-up policy, China has become the world's second-largest economy and has lifted more people out of poverty than any other country in history. "Open development", the fourth development concept, is exemplified by China's free trade zones, the Belt and Road Initiative, and Chinese companies going abroad (building infrastructure, selling high-speed rail, even buying foreign companies).

The concepts driving China's change

I went to Shanghai, a city I know well, to see China's first pilot free trade zone, established in 2013. What's the FTZ's impact on opening-up? How does opening-up today differ from the opening-up in the 1980s? I asked the chairman of the China (Shanghai) Pilot Free Trade Zone, who is also the secretary of the CPC Pudong Committee, Shen Xiaoming. He explained how the zone is a test bed for implementing the five major development concepts.

China cannot become a "moderately prosperous society" until its economic and social imbalances - particularly between rural and urban areas - are reduced and poverty is eliminated. That's why "shared development", the fifth development concept, is vital. Shared development comes last, not because it is least important, but because it requires the prior success of the first four development concepts.

Nowhere is this rebalancing more vital than in healthcare. To investigate, I spent a week in Qinghai province - Xining, the capital, and Yushu, the Tibetan autonomous prefecture - meeting people at all levels, from senior provincial officials to hospital administrators to village doctors to elderly patients.

Fan Jie, director of the Sustainable Development Research Center of the Chinese Academy of Sciences, describes the five major development concepts as a "fundamental change of the principles of development" that will affect both decision-making and the measurement of development effectiveness. He characterizes the major obstacle to their implementation as "institutional impediments" that require top-down design and enforcement.

As China's economy settles into its new normal, with slower growth and multiple challenges, Xi calls for market and government, working together, to optimize and balance efficiency and fairness. The government, in Xi's philosophy, is smart, while the market is decisive. That's why his five major development concepts now inform the thinking and guides the behavior of officials at all levels of government.

For China to fulfill its first comprehensive goal of becoming a moderately prosperous society by 2020, its economy must transition and its society must rebalance - and to bring about such major transformations, the five major development concepts are crucial.

Watch The Five Major Development Concepts on Closer to China with R.L.Kuhn - CCTV News, Sundays 9:30 am and 9:30 pm China time, beginning Sept 25.

In the following weeks, I'll be writing on each of the five major development concepts: innovative, coordinated, green, open and shared.

The author is a public intellectual, political and economics commentator and international corporate strategist. He is the host of Closer To China with R.L.Kuhn on CCTV News. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 09/23/2016 page9)