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Chinese Economist Hu Angang:

Unprecedented Greening, Expansion, Competition


Unprecedented Greening, Expansion, Competition

Source:Kuo-Tai Liu

One of China’s foremost economic planners considers the new five-year plan currently in the works in Beijing, and the changes it will precipitate.



Unprecedented Greening, Expansion, Competition

By Sherry Lee
From CommonWealth Magazine (vol. 456 )

Hu Angang, Director of Tsinghua University's Center for China Studies in Beijing, is a passionate and energetic academic who has been systemically researching the national conditions of China since as early as 1985. In his office are all kinds of population statistics, data on climate and environmental changes. Much like a supercomputer, his mind crunches numbers on the past and current state of China. Through interviews and writings, he trains his disciplined thoughts on the current state of China, and like the subject of his inquiries, he seems to be on the cusp of a period of highly compressed growth unparalleled in human history.

Last year, Hu stirred a great deal of excitement with his "green cat thesis."

Referencing Deng Xiaoping's famous quote, "Whether it's a black cat or a white cat, as long as it catches mice, it's a good cat," Hu advised: "China should bid farewell to its 'black cat' form of economic growth, and focus on becoming a 'green cat'."

Economic development others have taken a decade to achieve, China has accomplished in two to three years, and the country still seeks to continue making miracles. But will those miracles all be so fortunate?

Hu is one of more than 10,000 academics behind China's next five-year plan. So what does he see as China's focus and challenges over the next five years?

What follows are highlights from a CommonWealth Magazine interview:

In October the Chinese Communist Party will open the Fifth Plenary Session of the 17th Central Committee for the review and passage of Party Central recommendations regarding its 12th Five-Year Plan. The session will provide answers regarding the basic ideology, general direction and fundamental objectives for the nation.

Based on Central Committee recommendations, a specific outline for the next Five-Year Plan will be formulated between October and February of next year, which will be reviewed and passed at the next session of the National People's Congress, scheduled to convene in March 2011.

This reflects the thinking process of China's brains, shedding light on national strategic intentions, defining the focus of government efforts and guiding overall market activity. In short, it's actually the designing of a master blueprint for the coming five years that becomes the guiding principles for our actions.

Consequently, this plan paints a precise picture of where China is going, toward what ends, and with what objectives. The eleventh five-year plan was one of the best executed in the history of China's development, falling short on only two of its objectives. The first was to increase R&D [spending] to account for two percent of gross domestic product, which now seems somewhat unlikely, as it stands at just around 1.61 percent. The second was to reduce energy consumption per capita/unit of GDP value by 20 percent. The actual figure achieved was only around 16 percent.

'Green Cat' Thesis Takes Off

The most important direction of the 12th Five-Year Plan, what I define as China's first green development, is also a historical starting point for realization of the objective of green modernization by 2050. Once green development has become a fundamental principle and core benchmark, China will continue to move in this direction. What we call green development is not merely a concept. What the 11th Five-Year Plan termed the "population, resource and environmental index" has now been confirmed as the "green development index."

In fact, this is my "green cat" idea in more concrete terms. How do I measure whether you've changed colors? On what basis might I say you've changed colors? It's no longer conceptual – it's been laid out concretely. In three years, we can conduct a mid-term evaluation. In five years, we can make a late-stage evaluation. In another five years, we can do an updated assessment based on more appropriate green indicators.

For green issues, we've put together 47 indicators, including 24 core indicators and 23 secondary indicators, and this could provide China with an extremely clear-cut direction and feasible action plan for the green industrial revolution of which I speak.

If these green indicators are written into the plan, this sort of cudgel can bring change. This cudgel naturally won't bring change overnight – it will be a gradual process. Actually, the indicators of the 11th Five-Year Plan have already wrought change, with energy conservation and emissions reduction serving as indicators of constraint, constraining provincial governors, constraining city mayors and constraining county executives. We're hopeful of continuing to proceed along this correct path and not retreat.

China's current urbanization ratio stands at 46.6 percent, about the same level as Japan in the middle to late 1950s. During the course of the 12th Five-Year Plan, that level will surpass 50 percent, and consequently, that will demand an even more sustained period of high growth, a period not simply driven by the massive requirements of the manufacturing sector but primarily by the rise of a modern service sector.

Taking Beijing as a case in point, in 2003 the city's workforce stood at less than eight million, a figure that had risen to 12.5 million as of last year. None of world's biggest cities could have added 4.5 million people to their workforces over a period of just seven years.

Five Years of Unprecedented Expansion, Competition

Over the next five years, China's market will see unprecedented expansion, with the attendant aspect of that market becoming increasingly competitive. And right now, the Chinese market has the highest level of competition in the world.

China's market is absolutely huge and can effectively offset the design, R&D and marketing costs of the latest products. As such, entry into the Chinese market has now become a strategic policy decision for the world's top 500 corporations, and no longer an ordinary decision in terms of significance. Whereas previously the major corporations targeted markets in China's primary and secondary cities, they're now also going after third- and fourth-tier cities with populations of 200,000 to 500,000.

Looked at from this angle, the China market is as huge as you could imagine it to be, with as much competition as you could imagine it to have. It's really hard for an enterprise to gain a foothold in the China market.

I've been researching the national conditions of China for more than 20 years, and the whole place is difficult, but the solutions always outnumber the problems. There will of course be many social and economic challenges during the period of the 12th Five-Year Plan. But, it's like people say, "Where there's the will there's a way."

Translated from the Chinese by Brian Kennedy