subject: China's 12th 5 Year Plan - Leaders Pass the Buck [print this page] China's 12th 5 Year Plan - Leaders Pass the Buck
As the delegates at China's National People's Congress drift away, as I predicted, it was an overall case of more of the same. This year's NPC, at which the next five-year-plan is discussed and approved, has more resonance than others. Much of the current leadership is set to retire within the next 12 months everyone from Chairman Hu Jintao, Premier Wen Jiabao and the nation's keeper of purse strings, Liu Minkang, are all set to don slippers and embrace a more sedentary life.
What is needed, according to them, is more of the same. No real concrete measures were adopted other than a fairly lame recognition that China's growth would slow. Yet what many in China believe is required is a fairly urgent need for reform and much assertive leadership in key areas. If that is true, this NPC did not deliver. The buck is being passed to the next generation yet handcuffing them to a plan they have to adhere to but may not agree with. I wrote about this back in October, when the plan was first being discussed, in my article China's Plenum on Five Year Plan Actually More of the Same.
It's a no-brainer in terms of growth China has been shouting about its GDP rates for years now. Usually above 10 percent or more, there's no real shock in that given the bonanza that China's admission into the WTO has given it. What is now a US$3.3 billion economy was just a third of that size in 2001. Given a relatively low base to start with, the rise of China as a global economy and that 10 percent growth rate is no surprise. What is also unsurprising is the fact that it is beginning to slow it's hard to maintain annual base growth rates from an ever increasing economy. So, we are told China will grow at 7 percent from now on. That's it?
That's news however for many of China's provincial and city governments, well used to being asked to maintain rates at 10 percent or higher. China's second tier leaders on the ground as it were have to follow the government policy and the temptation to influence actual growth rates through a variety of "get growth fast" schemes has become endemic. Some cities have already made plans to expand their economies by 30 percent, as we pointed out back in January.
The quickest way to get that growth into official statistics is through property development, and I still don't get the lack of analytical attention to this. Traveling extensively throughout China every year I notice increasing amounts of empty blocks of apartments, industrial parks and even entire cities. Sitting on the government books as assets to show off to the NPC as "growth," they are actually nothing of the sort. China, in fact, has huge volumes of white elephants to clear out of its system. It's dangerous to make individual comparisons when comparing specific projects with the might of China's economy, however I do believe in this case they are symptomatic of a wider malaise. Guangzhou's spanking new opera house, for example, is only showing two actual operas this year. The building is there, but the soft part administration costs and operating it effectively seems to be missing. Still in Guangzhou, the city's recent Asian Games cost an estimated US$18 billion which is more than London is spending in next year's Olympics. The gigantic and hugely impressive new airport in Northeast China's Manzhouli is capable of handling five million passengers a year. But the city's population is about 125,000.
Not all of the buildings are sound either. In what ex-Premier Zhu Rongji used to term "tofu constructions," a little reported 5.8 magnitude earthquake in Yunnan last week destroyed close to 2,000 houses and badly damaged another 49,000. Some 300,000 have been made homeless following the quake in the county of Yingjiang, near China's border with Burma. According to Wang Yayong, a chief engineer at the Chinese Academy of Building Research, "the buildings should not have fallen like that." GDP growth targets meet shoddy construction. Local media report that 25 people died and a further 250 were seriously injured in the disaster suppressed by the horrific news coming out of Japan. But it doesn't disguise the national malaise of growth targets being married to property developers; it's merely just another example in an increasingly long list of subverted developments.
