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A new start for change
FESTIVE MOMENT: A father and his son visit the Badachu Park in Beijing on September 21, which has been decorated to celebrate the National Day on October 1 (CNSPHOTO)
When the People's Republic of China was founded on October 1, 1949, the new government inherited an economy that was overwhelmingly agrarian, ravaged by decades of warfare, and wracked by widespread poverty.
Many mines and factories had been damaged or destroyed. Transportation, communication, and power systems had been destroyed or had deteriorated because of lack of maintenance. Agriculture had been disrupted, and food production was significantly below its pre-war peak level. Furthermore, economic ills were compounded by one of the most virulent instances of inflation in global history.
Many observers of post-1949 China doubted whether the brand-new government could survive the economic chaos.
Progress driven by reforms
Sixty-five years later, the Chinese economy, regarded by many as the most dynamic in the world, is on track to become the No. 1 economy by sheer size.
According to official figures, China's outbound direct investment reached a record high of $108 billion in 2013, making it the world's third largest investor for the second year running. The annual growth rate of 22.8 percent was much higher than the 1.4-percent gain in global outbound investment.
Chinese e-commerce company Alibaba Group Holding Ltd. made the biggest stock market debut in history when it was listed at the New York Stock Exchange on September 19, raising a total of $21.8 billion and soaring 38 percent in its first session, as investors clamored for a piece of the company, representing a massive bet on the future growth of China's burgeoning middle class.
According to the latest Fortune Global 500 list, released in July, China saw 100 companies entering the list, securing the No.2 place in the number of companies on the list and marking the 11th year straight that the number of Chinese companies has increased.
In 2013, a Chinese bank, Industrial and Commercial Bank of China (ICBC), for the first time topped The Banker magazine's annual rankings of the profits and capital strength of the world's 1,000 largest banks. In the rankings released this July, the growth story of Chinese banks looks to be continuing unabated, with ICBC keeping its position as the strongest bank, and China's top banks accounting for almost one third of a record $920 billion of profits made by the world's top 1,000 banks last year.
The World Intellectual Property Organization (WIPO) said in March that the United States and China drove record-level patent-filing activity via WIPO in 2013 as the number of annual international patent applications surpassed the 200,000 mark for the first time. China, accounting for 29 percent of total growth under WIPO's Patent and Cooperation Treaty (PCT) system, overtook Germany to become the third largest user of the system.
"Reforms have profoundly and comprehensively transformed China. In retrospect, every major round of reforms has been promptly followed by a period of fast economic growth and social progress and whenever the socioeconomic development was met with difficulties and barriers, a new round of reforms was initiated in response," said Chi Fulin, President of the China Institute for Reform and Development.
Xiaogang, a small village in Fengyang County, east China's Anhui Province, is famous for representing the epitome of China's last round of rural reforms. It started with a secret arrangement among local farmers to subdivide their common farmland in December 1978, after which agricultural production increased dramatically. The village was then held up as a model by China's leadership in launching a national reform that made rural households contractors of farmland, and greatly incentivized agricultural production and productivity.
The reforms have transformed China's rural areas as well as people's lives in Xiaogang. Half of the families in this village now live in villas. Local farmers have in recent years built tourism facilities, including a museum related to the famous reform, to attract urban residents seeking a vacation getaway. The revenues from running vineyards and family-run hostels have boosted the local farmers' per-capita income to more than 12,000 yuan ($1,950) in 2013, compared to a mere 20 yuan ($3.2) in 1978.
After becoming the general secretary of the Communist Party of China (CPC) Central Committee in November 2012, Xi Jinping, who was elected Chinese president the following March, wasted no time in reassuring the world that the CPC will not only persevere with reforms championed by Deng Xiaoping, chief architect of China's reform and opening up, but also initiate new paths. Shenzhen, the special economic zone of south China's Guangdong Province that is synonymous with the country's 36-year-old era of reform drive, was the first city that Xi inspected after becoming the Party chief.
"I chose Guangdong because I intended to reflect on China's opening-up and reform progress on the site where the trend was first initiated," Xi recalled.
FREE MEDICAL SERVICE: A retired woman (second left) receives a free health check-up at her community in Ganzhou, Jiangxi province, on June 9 (XINHUA)
The Third Plenary Session of the 18th CPC Central Committee, held in November 2013, unveiled an overall deployment of China's new comprehensive reforms. A leading group for overall reform headed by Xi has been established as a key measure to promote the country's comprehensive deepening of reforms.
A series of reforms have already taken place since the landmark plenary session. The reeducation-through-labor system, which allowed detention for up to four years without an open trial, has been officially abolished. The one-child policy has been eased by allowing couples to have two children if one of them is an only child.
Business registration rules were reformed on March 1 by lifting restrictions on minimum registered capital, payment deadlines and cash ratio of registered capital to encourage start-ups. Between March and June, about 1.27 million new companies were registered in China, representing a year-on-year growth of almost 67 percent.
More reforms are in progress, such as the household registration system reform to give citizens without urban household registration equal access to public services in cities, reform on the purchase and use of government vehicles to cut hefty spending and avoid misuse of public money and the reform of cutting hefty salaries for executives of large state-owned enterprises. Meanwhile, medical reform will be expanded from 311 county-level public hospitals to more than 1,000 such institutions, covering 50 percent of Chinese counties, in 2014. The reform is aimed at improving the management of public hospitals and setting up a payroll and human resources system suited to the medical sector.
In the economic field, China is opening the door to private investors in oil and natural gas exploration and the banking sector, areas previously closed to private capital. Private capital has also been encouraged to invest in railway construction. The price mechanisms for agricultural products, and public service products are also undergoing reform.
The 'new normal' mode
"The Chinese economy is transitioning from a stage of high-speed growth to a stage of medium-high-speed growth. In order to step into the new growth routine smoothly and quickly, it is crucial for the government to reduce risks by deepening reforms so as to achieve improved quality of the economy during the next stage," said Liu Shijin, Deputy Director of the Development Research Center of the State Council.
During his inspection of central China's Henan Province in May, Xi said that China's economic growth must adjust itself to the requirements of a "new normal" phase.
The relatively weak economic data since the beginning of this year were seen to be the background for Xi's remarks. In August, China's industrial output grew at its slowest pace since December 2008. Electricity production, automobile and property sales and foreign direct investment have all been weaker than expected.
However, more than 9.7 million urban jobs were created during the first eight months of 2014, over 100,000 more compared with the same period last year. In the aforementioned timeframe, the total number of newly registered market entities was more than 8 million. From March to August, in the wake of the business registration reform, the number of new businesses grew by 61 percent over the same period of the previous year, all pointing to a massive upsurge which has generated more than 10 million jobs.
During the first half of 2014, average disposable resident income rose 10.8 percent year on year to 10,025 yuan ($1,627) and the inflation-adjusted growth rate stood at 8.3 percent. The income gap between urban and rural residents narrowed, with actual income growth in rural China 2.7 percentage points higher than that in urban areas in the January-June period.
A series of commentaries on "China's economy in the 'new normal'" appeared on the first page of People's Daily on August 5, 6 and 7, respectively. They said that the seemingly indomitable economic growth China experienced in the three decades since 1978 is no longer feasible, sustainable or necessary; the "new normal" China is less interested in growth rates and more interested in quality and efficiency of growth: pushing forward reform, adjusting structure and improving people's lives.
CARING FOR THE LEFT BEHIND: On July 18, a college student teaches an art class in a village of Pingdingshan, Henan Province, for rural students who stay at home while their parents seek opportunities in the cities (XINHUA)
Greater potential
The Chinese Government has also pressed ahead with management reforms by scrapping or decentralizing administrative approval rights in an effort to improve efficiency and stem corruption.
Li Zhangze, spokesman for the group spearheading the reforms under the State Council, said on September 10 that a total of 632 administrative approval items had been either dismissed or relegated to governments at lower levels. The Central Government aims to scrap and decentralize a further 200 administrative approval items within the year.
"Through these efforts, the government has achieved important progress in simplifying administrative procedures and bringing about changes to management," he said.
Addressing the Summer Davos Forum in Tianjin on September 10, Chinese Premier Li Keqiang said that instead of adopting strong economic stimulus or easing monetary policy, the Chinese Government has promoted reform and economic readjustment to maintain steady economic performance.
"China's reform and opening-up for the past three-plus decades and beyond has in itself represented a huge innovation drive, and the huge, untapped potential of innovation and development in the future still lies in institutional reform," said Li.
Cheng Zhenfeng, CEO of a Shanghai-based startup producing a coating that protects against the corrosion of pipes or vessels under insulation, is confident about the future. Owing to the reform of lowering registration hurdles and simplifying registration procedures for small businesses, Cheng's company, registered with subscribed capital of 3 million yuan ($487,000), was able to open to business much earlier than he had expected. Within three months, the company had incorporated advanced technologies from Germany into the mix and signed orders with several vessel manufacturers.
"The reforms have opened the fast track for private companies to enter the market," Cheng told Xinhua News Agency.
A fairer society
On different occasions, Xi has stressed that the reform would be meaningless without creating a fair social environment, which could even engender more inequalities. He said that while creating more social wealth is paramount, it is equally important to ensure improvements in people's welfare.
Premier Li also stressed recently that carrying out reforms should primarily ensure fairness by giving job seekers equal opportunities, entrepreneurs a fair environment for competition and children equal access to quality education.
As part of "the most comprehensive" reform since China resumed the national college entrance examination in 1977, a new measure requires first-class universities to allocate a certain enrollment quota for students from poor, remote and ethnic minority regions. The new policy saw enrollment rates from rural areas grow by 11.4 percent year on year in 2014, with roughly 50,000 students from across 832 impoverished counties in 22 provinces gaining entrance to top universities.
By the end of 2011, China's basic health insurance system had covered 1.3 billion people, or 95 percent of the population. The per-capita government subsidy for residents covered by this system has also increased steadily over the years.
FESTIVE MOMENT: A father and his son visit the Badachu Park in Beijing on September 21, which has been decorated to celebrate the National Day on October 1 (CNSPHOTO)
When the People's Republic of China was founded on October 1, 1949, the new government inherited an economy that was overwhelmingly agrarian, ravaged by decades of warfare, and wracked by widespread poverty.
Many mines and factories had been damaged or destroyed. Transportation, communication, and power systems had been destroyed or had deteriorated because of lack of maintenance. Agriculture had been disrupted, and food production was significantly below its pre-war peak level. Furthermore, economic ills were compounded by one of the most virulent instances of inflation in global history.
Many observers of post-1949 China doubted whether the brand-new government could survive the economic chaos.
Progress driven by reforms
Sixty-five years later, the Chinese economy, regarded by many as the most dynamic in the world, is on track to become the No. 1 economy by sheer size.
According to official figures, China's outbound direct investment reached a record high of $108 billion in 2013, making it the world's third largest investor for the second year running. The annual growth rate of 22.8 percent was much higher than the 1.4-percent gain in global outbound investment.
Chinese e-commerce company Alibaba Group Holding Ltd. made the biggest stock market debut in history when it was listed at the New York Stock Exchange on September 19, raising a total of $21.8 billion and soaring 38 percent in its first session, as investors clamored for a piece of the company, representing a massive bet on the future growth of China's burgeoning middle class.
According to the latest Fortune Global 500 list, released in July, China saw 100 companies entering the list, securing the No.2 place in the number of companies on the list and marking the 11th year straight that the number of Chinese companies has increased.
In 2013, a Chinese bank, Industrial and Commercial Bank of China (ICBC), for the first time topped The Banker magazine's annual rankings of the profits and capital strength of the world's 1,000 largest banks. In the rankings released this July, the growth story of Chinese banks looks to be continuing unabated, with ICBC keeping its position as the strongest bank, and China's top banks accounting for almost one third of a record $920 billion of profits made by the world's top 1,000 banks last year.
The World Intellectual Property Organization (WIPO) said in March that the United States and China drove record-level patent-filing activity via WIPO in 2013 as the number of annual international patent applications surpassed the 200,000 mark for the first time. China, accounting for 29 percent of total growth under WIPO's Patent and Cooperation Treaty (PCT) system, overtook Germany to become the third largest user of the system.
"Reforms have profoundly and comprehensively transformed China. In retrospect, every major round of reforms has been promptly followed by a period of fast economic growth and social progress and whenever the socioeconomic development was met with difficulties and barriers, a new round of reforms was initiated in response," said Chi Fulin, President of the China Institute for Reform and Development.
Xiaogang, a small village in Fengyang County, east China's Anhui Province, is famous for representing the epitome of China's last round of rural reforms. It started with a secret arrangement among local farmers to subdivide their common farmland in December 1978, after which agricultural production increased dramatically. The village was then held up as a model by China's leadership in launching a national reform that made rural households contractors of farmland, and greatly incentivized agricultural production and productivity.
The reforms have transformed China's rural areas as well as people's lives in Xiaogang. Half of the families in this village now live in villas. Local farmers have in recent years built tourism facilities, including a museum related to the famous reform, to attract urban residents seeking a vacation getaway. The revenues from running vineyards and family-run hostels have boosted the local farmers' per-capita income to more than 12,000 yuan ($1,950) in 2013, compared to a mere 20 yuan ($3.2) in 1978.
After becoming the general secretary of the Communist Party of China (CPC) Central Committee in November 2012, Xi Jinping, who was elected Chinese president the following March, wasted no time in reassuring the world that the CPC will not only persevere with reforms championed by Deng Xiaoping, chief architect of China's reform and opening up, but also initiate new paths. Shenzhen, the special economic zone of south China's Guangdong Province that is synonymous with the country's 36-year-old era of reform drive, was the first city that Xi inspected after becoming the Party chief.
"I chose Guangdong because I intended to reflect on China's opening-up and reform progress on the site where the trend was first initiated," Xi recalled.
FREE MEDICAL SERVICE: A retired woman (second left) receives a free health check-up at her community in Ganzhou, Jiangxi province, on June 9 (XINHUA)
The Third Plenary Session of the 18th CPC Central Committee, held in November 2013, unveiled an overall deployment of China's new comprehensive reforms. A leading group for overall reform headed by Xi has been established as a key measure to promote the country's comprehensive deepening of reforms.
A series of reforms have already taken place since the landmark plenary session. The reeducation-through-labor system, which allowed detention for up to four years without an open trial, has been officially abolished. The one-child policy has been eased by allowing couples to have two children if one of them is an only child.
Business registration rules were reformed on March 1 by lifting restrictions on minimum registered capital, payment deadlines and cash ratio of registered capital to encourage start-ups. Between March and June, about 1.27 million new companies were registered in China, representing a year-on-year growth of almost 67 percent.
More reforms are in progress, such as the household registration system reform to give citizens without urban household registration equal access to public services in cities, reform on the purchase and use of government vehicles to cut hefty spending and avoid misuse of public money and the reform of cutting hefty salaries for executives of large state-owned enterprises. Meanwhile, medical reform will be expanded from 311 county-level public hospitals to more than 1,000 such institutions, covering 50 percent of Chinese counties, in 2014. The reform is aimed at improving the management of public hospitals and setting up a payroll and human resources system suited to the medical sector.
In the economic field, China is opening the door to private investors in oil and natural gas exploration and the banking sector, areas previously closed to private capital. Private capital has also been encouraged to invest in railway construction. The price mechanisms for agricultural products, and public service products are also undergoing reform.
The 'new normal' mode
"The Chinese economy is transitioning from a stage of high-speed growth to a stage of medium-high-speed growth. In order to step into the new growth routine smoothly and quickly, it is crucial for the government to reduce risks by deepening reforms so as to achieve improved quality of the economy during the next stage," said Liu Shijin, Deputy Director of the Development Research Center of the State Council.
During his inspection of central China's Henan Province in May, Xi said that China's economic growth must adjust itself to the requirements of a "new normal" phase.
The relatively weak economic data since the beginning of this year were seen to be the background for Xi's remarks. In August, China's industrial output grew at its slowest pace since December 2008. Electricity production, automobile and property sales and foreign direct investment have all been weaker than expected.
However, more than 9.7 million urban jobs were created during the first eight months of 2014, over 100,000 more compared with the same period last year. In the aforementioned timeframe, the total number of newly registered market entities was more than 8 million. From March to August, in the wake of the business registration reform, the number of new businesses grew by 61 percent over the same period of the previous year, all pointing to a massive upsurge which has generated more than 10 million jobs.
During the first half of 2014, average disposable resident income rose 10.8 percent year on year to 10,025 yuan ($1,627) and the inflation-adjusted growth rate stood at 8.3 percent. The income gap between urban and rural residents narrowed, with actual income growth in rural China 2.7 percentage points higher than that in urban areas in the January-June period.
A series of commentaries on "China's economy in the 'new normal'" appeared on the first page of People's Daily on August 5, 6 and 7, respectively. They said that the seemingly indomitable economic growth China experienced in the three decades since 1978 is no longer feasible, sustainable or necessary; the "new normal" China is less interested in growth rates and more interested in quality and efficiency of growth: pushing forward reform, adjusting structure and improving people's lives.
CARING FOR THE LEFT BEHIND: On July 18, a college student teaches an art class in a village of Pingdingshan, Henan Province, for rural students who stay at home while their parents seek opportunities in the cities (XINHUA)
Greater potential
The Chinese Government has also pressed ahead with management reforms by scrapping or decentralizing administrative approval rights in an effort to improve efficiency and stem corruption.
Li Zhangze, spokesman for the group spearheading the reforms under the State Council, said on September 10 that a total of 632 administrative approval items had been either dismissed or relegated to governments at lower levels. The Central Government aims to scrap and decentralize a further 200 administrative approval items within the year.
"Through these efforts, the government has achieved important progress in simplifying administrative procedures and bringing about changes to management," he said.
Addressing the Summer Davos Forum in Tianjin on September 10, Chinese Premier Li Keqiang said that instead of adopting strong economic stimulus or easing monetary policy, the Chinese Government has promoted reform and economic readjustment to maintain steady economic performance.
"China's reform and opening-up for the past three-plus decades and beyond has in itself represented a huge innovation drive, and the huge, untapped potential of innovation and development in the future still lies in institutional reform," said Li.
Cheng Zhenfeng, CEO of a Shanghai-based startup producing a coating that protects against the corrosion of pipes or vessels under insulation, is confident about the future. Owing to the reform of lowering registration hurdles and simplifying registration procedures for small businesses, Cheng's company, registered with subscribed capital of 3 million yuan ($487,000), was able to open to business much earlier than he had expected. Within three months, the company had incorporated advanced technologies from Germany into the mix and signed orders with several vessel manufacturers.
"The reforms have opened the fast track for private companies to enter the market," Cheng told Xinhua News Agency.
A fairer society
On different occasions, Xi has stressed that the reform would be meaningless without creating a fair social environment, which could even engender more inequalities. He said that while creating more social wealth is paramount, it is equally important to ensure improvements in people's welfare.
Premier Li also stressed recently that carrying out reforms should primarily ensure fairness by giving job seekers equal opportunities, entrepreneurs a fair environment for competition and children equal access to quality education.
As part of "the most comprehensive" reform since China resumed the national college entrance examination in 1977, a new measure requires first-class universities to allocate a certain enrollment quota for students from poor, remote and ethnic minority regions. The new policy saw enrollment rates from rural areas grow by 11.4 percent year on year in 2014, with roughly 50,000 students from across 832 impoverished counties in 22 provinces gaining entrance to top universities.
By the end of 2011, China's basic health insurance system had covered 1.3 billion people, or 95 percent of the population. The per-capita government subsidy for residents covered by this system has also increased steadily over the years.
