China’s Development and Its Implications
China’s Development and Its Implications
(Full texts of Madame FU Ying's speech)
Members of the Faculty and Students, Ladies and Gentlemen,
It is a great honor for me to address you today at the Victoria University. This University is known for fostering strong global links in teaching and research.
I did some homework on the university before coming, and I learned that you have a Latin Motto, which is over a century old, and yet its English translation is still under debate. Should it be “wisdom is more to be desired than gold,” or “wisdom is to be desired for the sake of gold”? Such a debate is a demonstration of its open attitude towards learning.
New Zealand is a popular tourist destination for the Chinese, which is adored for its fresh air and mind-blowing scenery, not to mention the Hobbits. And especially for Chinese mothers, New Zealand makes high quality baby formula!
When preparing for this speech, I was told that that China’s economic slowdown is what people are concerned of. Indeed the many comments about Chinese economic volatility contrast sharply with years of bullish outlook.
What I want to say first is that, China’s economy is facing very sophisticated challenges, but the prospects remain good as the fundamentals of the economy are resilient.
Before I left China, the Standing Committee of the National People’s Congress of China, to which I am a member, just had its August session and Minister Xu Shaoshi, Minister of the National Development and Reform Commission (NDRC), came to report to us about the current economic performance.
He assured us that China’s economy remains stable in general, but there are difficulties and problems that are deeply-seated.
One of the important duties of the National People’s Congress and its Standing Committee is to supervise on the work of the government and the ministers are required to report their work regularly and sometimes face questions.
Indeed, all three drivers of China’s growth—investment, export, and consumption—are slowing in various degrees. And the new sources of growth are not strong enough to replace the traditional ones which are on the decline, i.e. the labor intensive export sectors are facing difficulties caused by rising cost for labor and resources and sluggish export market.
There is also the problem of capital flowing more into the virtual economy instead of the real economy which increases financial risks. The uncertainties of the global economy are also having an impact on China’s economy.
So, generally speaking, the downward pressure is growing and China’s growth rate in the first half of this year was 7%, dropped by 0.4%.
China’s trade growth has already been shrinking for a few years. In the first half of this year, it came down by 6.9%, with import dropping more, including with New Zealand.
All this is part of the economic readjustment. After 30 and more years’ of high-speed development, China now has the second largest economy of the world. However, as the economic rules showed, we could grow at high rate forever. Trees cannot grow all the way into the sky unless there were magic beans (as in Jack and the Beanstalk)!
The Chinese government is making adjustments in its policy as well. When the Premier reported to the National People’s Congress early in the year, he proposed a growth target for 2015 lower than before, to about 7%. And the Congress adopted the report.
With the new emphasis on sustainable and healthy growth, China is making enormous efforts to shift from traditional to high technology; from labor-intensive to capital intensive; from low-value added to high-value added industries, and from relying mainly on export to more on domestic consumption.
I trust these structural changes will eventually pay off. And now we’ve already seen some results. The services industry has climbed to half of the GDP; consumption is contributing to 60% to GDP growth; household income growth is 7.6%, higher than that of the GDP growth.
Though with lower growth rate, the size of China’s growth remains substantial. If this year’s target can be achieved, the increment of growth will be about 7 trillion US$, about the total GDO of Switzerland.
But of course we have to note that China’s per capita GDP is only about 19% of that of New Zealand. And it is not very likely that the Chinese will catch up on that in the foreseeable future
To look at it from another angle, the huge challenges China faces is exactly the potentials its growth lies in. For example, one major challenge is the disparity in the development, between the East and the West, the urban and the rural area, and the rich and the poor.
Take for example, in 2014, China’s urbanization level was 54.77%. In terms of human urbanization, the rate is under 40% as many migrant workers and their children who live in the big cities are not yet enjoying urban healthcare and education service. Looking ahead, continuous urbanization will bring more people into the cities and it will generate huge new demand for services and facilities.
That’s why we say the Chinese economy has tremendous potential for long-term growth. Also, we have many unique advantages like very stable society, there are over 7 million new college graduate every year, and there is world-class infrastructure.
So what I really want to say is that, China is a complex and diversified country. To understand it, one needs to have patience and view it from different dimensions, instead of trying to put it in this or that box.
China is a country that is persistently undergoing reforms for almost 40 years. Very few countries in the world can do that. It shows that we are never satisfied with ourselves and that we are determined to change and improve.
Mr. Deng Xiaoping, the architect of China’s reform and opening up, famously said that reform is akin to “crossing the river by feeling the stones.” However, now, having waded so far into the river, we sometimes find the water too deep to feel the stones.
The third plenary session of the 18th Communist Party Central Committee unveiled a whole package of new reform measures which will give guidance in the coming years. The 12th National People’s Congress and its Standing Committee have also speeded up legislation to provide major reforms sound legal base.
Obviously it’s not going to be easy, and further reforms face far more complex challenges, many of which involve interest adjustments and are hard to address. And therefore, it takes time. But we are confident that we will get to the other side of the river.
The opening-up measures are also continuing. For example, foreign investors have greater access resulted from the slashing by half of the category of sectors previously restricted to foreign investment. It will make China more attractive to investment. In the meantime, China’s investment overseas is growing rapidly, rising to over 100 billion U.S. dollars annually.
New Zealand is an early-bird for the Chinese market. It is the first developed country that signed a Free Trade Agreement with China in 2008, catching the tide of China’s fast growth. Since then, our bilateral trade has achieved great progress, growing by 320%.
Another angle about China is that, it is transforming from a very poor country that had long suffered from shortage of food and basic needs to relative sufficiency. It was not until the year 1993 that we stopped printing food coupons. Such a transformation is inevitably accompanied by fast social changes, which have brought about new challenges.
The Britain writer Charles Dickens made harrowing descriptions of the social upheaval created by industrial development which Britain struggled with for more than two hundred years. I remember visiting Port Arthur of Tasmania, where one could see the footprints of how Britain tried to manage sharp social conflicts by sending people on exiling.
China is many times bigger than Britain, and has industrialized a lot faster. Now China is confronted with the huge task of ensuring that its growth benefit is shared in an equitable and fair manner. And the building and improving of laws and rules can catch up with the changes.
The environmental cost for China’s growth is also a big concern. When I was young, there were 6 million bicycles in Beijing, and blue sky and white clouds were normal scene. Now the number of Beijing’ automobile vehicles is about to reach 6 million. China has turned into the world’s largest automobile market 6 years ago and the whole country already has 264 million vehicles, about 150 times that of 1980.
We now are keenly aware of the importance of environmental protection. The newly amended Law on Environmental Protection which went to effect on January 1 this year is regarded as “the strictest law with teeth”. It also entitles social organizations to file environmental lawsuits for public interest. We would like to see the law fully implemented.
I cannot end my speech without mentioning that China’s relationship with the world is also undergoing major changes. There is greater interdependence.
China is committed to the policy of peaceful development and is taking more and more regional and global responsibilities. Chinese president Xi Jinping, in his speech at the 70th anniversary of the victory of the Second World War, placed very strong emphasis on peace.
The general public in China, who watched the military parade on September 3rd, shared one common happy feeling: that is, we are finally safe, and there is a strong army to protect the country. There won’t be another Opium War or Japanese military aggression.
For a country the size of China, peace needs to be defended with strength. China’s development and people’s prosperity need a long-term peaceful environment.
Of course, as China grows stronger, it needs to develop a wider vision for the world, including world peace and security. And that would come through cooperation and consultations among countries of the world.
As the title of my speech went, China is a tale with many dimensions. It’s impossible for me to cover every dimensions in one speech. All I can say is that, with 1.3 billion people trying so hard, it’s got to be a tale with a happy ending for China and the world.
As a New Zealand proverb goes, “a house full of people is a house full of different points of view”. Let both our common understandings and different points of view enrich us and the world. Thank you.