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5-year plan sets stage for solving problems

By Wang Yiming, Li Shuang and Zeng Zhize (China Daily)
Updated: 2006-01-04 09:27

Inconsistencies between the country's economic and social progress are becoming increasingly obvious in the context of the Chinese economy making great gains over the last two decades or so.

The problem must be resolved as soon as possible now the central authorities have urged building a harmonious society and as the 11th Five-Year Plan (2006-10) is soon to be implemented.

The inconsistencies are manifested in the following phenomena.

Education falls far short of demand dictated by fast economic development. The problem is especially serious in the vast rural areas of the country.

The fifth national demographic census, which was conducted in 2000, shows the illiteracy rate stood at 5.22 per cent among those aged 15 years old and above in urban areas and townships. But the figure was as high as 11.55 per cent in rural regions.

Those that have received only junior high school or primary education made up 91 per cent of the rural labour force.

In addition, healthcare development lags far behind economic progress.

The numbers of hospital beds and doctors for every 1,000 citizens had increased from 1.93 and 1.07 respectively in 1978 to 2.4 and 1.5 respectively in 2004 a fairly slow pace.

This is compounded by the fact that medical and public hygiene resources are unevenly distributed, with urban areas enjoying an 80-per-cent share while rural residents, who make up 70 per cent of the total population, have to make do with the remainder.

Cultural undertakings are also far outstripped by economic growth and the increasing demand from the populace.

Cultural life in rural regions poverty-stricken areas in particular remains severely limited largely due to a lack of libraries, cultural stations and entertainment venues.

Unemployment poses another big problem.

The unemployment rate registered in urban areas and townships stood at 4.3 per cent in 2004. Up to 150 million redundant rural labourers currently need to find employment.

But large numbers of laid-off employees and farmers-turned-workers simply do not possess the skills required by modern industry.

Besides the challenges posed by unemployment, the social security network covers too small a proportion of the population.

In 2004, only 22.05 million people in urban areas and townships enjoyed the minimum level of social security, whereas the total number in need, not including rural residents, was at least 140 million.

Only 4.88 million rural residents were covered by the social security scheme while another 11.58 million received aid.

Income disparities between different groups are getting increasingly large.

In 1980, shortly after the launch of reform and opening up, the Chinese income Gini coefficient, which is a yardstick against which relative equality in income is measured, was 0.33 but now stands at 0.46 beyond the internationally accepted warning level of 0.43.

Another serious problem is that social affairs management systems are far from sound, which means limited ability to cope with emergencies and events threatening the security of society. There is a lack of a long-standing agency with sufficient authority to co-ordinate appropriate responses.

Apart from this, a fairly large number of non-producing units such as schools, research institutions, cultural units and medical organizations are stuck in the rut of the planned economy period.

As a result, many of these organizations are overstaffed, restricted by stiff rules, register huge operational costs, yield low efficiency and offer poor services.

The root cause of disequilibrium is the low level of economic development, despite the fact that the Chinese economy has been growing at a fast pace over the past 20 years.

In 2004, per-capita GDP was US$1,270 far below the world average of US$5,500.

Relatively low economic strength finds expression in low input into social development undertakings.

Also, mishaps in the course of the shift in the government's role are responsible.

Since reform and opening up, the government has quit some areas to avoid excessive interference. But in some cases the government has given too much ground to market forces where it should be exercising its authority, involving social justice, social order and delivering public services, such as education.

The formulation of a new development strategy is therefore necessary. First and foremost, job creation should enjoy top priority in terms of the development strategy.

It is forecast that the working age group those aged between 15 and 59 years old will not stop expanding until after 2020. By then, the number of people in this group will have reached 940 million, up from 820 million currently.

Bringing unemployment under control and increasing the number of jobs are naturally of great importance.

The new development phase requires the government to strengthen income distribution regulations, applying policies and social security mechanisms.

Special attention must be paid to the improvement of living standards for rural residents and low-income groups so everyone can share in the prosperity brought about by economic progress.

The new development strategy should also take into consideration the fact that reform and fast economic growth have diversified interests, which must be represented by pluralist social groups. As a result, the establishment of an effective social management and operative system is called for to prevent social problems from accumulating and becoming acute.

As citizens largely receive more than enough food and clothing, they want other commodities. This means a shift from a subsistence level to a higher plane, with individual development becoming more important.

People will become more concerned with safeguarding their rights and having more of a say in political life.

This calls for the strengthening of the government's role in providing public services related to education, science and technology, culture and public hygiene.

This also requires that the government increase investment in compulsory education, healthcare, public hygiene, public cultural affairs, the security of society and aid for the sick, disabled, old and young.

The authors are researchers from the Macroeconomics Research Institute under the National Development and Reform Commission.

(China Daily 01/04/2006 page4)