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China's 11th five-year plan
A roadmap for China's "harmonious society?"
Willy Lam, The Jamestown Foundation, China Brief
11/23/2005

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China’s 11th Five Year Plan (FYP) has laid out a grandiose roadmap for the country’s “scientific development,” a euphemism used by the country’s leadership for economic growth that takes into consideration the welfare of disadvantaged sectors as well as environmental concerns. Given the track record of China’s supercharged economy, there are relatively few doubters regarding the just-announced goals of attaining a GDP of US$4 trillion yuan, and a per capita GDP share of $3,000, by 2020. Yet more ambitious objectives such as curtailing pollution and energy waste—and in particular, “constructing a harmonious society”—could remain illusory given the Chinese Communist Party’s (CCP) refusal to entertain comprehensive structural and political reforms.

Almost immediately after taking power at the 16th CCP Congress in late 2002, President Hu Jintao and Premier Wen Jiabao sought to distinguish themselves from the ancien regime of ex-president Jiang Zemin by hoisting the banner of a “putting-people-first administration.” They also enunciated the theory of “scientific development,” which meant, as Wen put it last week, ensuring that GDP expansion would go hand-in-hand with marked improvement in “employment, social security, poverty reduction, education, medical care, and environmental protection.” The rich-poor gap, however, deemed the most explosive phenomenon in society, has widened in the past few years. The World Bank pointed out earlier this month that 150 million Chinese, mostly farmers in the western provinces, still live in acute poverty.

A key Hu-Wen policy aimed at spreading wealth more evenly and promoting social equality is to move around 300 million peasants—out of a total of up to 800 million rural inhabitants—to urban centers in the coming 15 years or so. This is due to the well-known fact that China’s farmland can support at most 150 million laborers, and that at least as many peasants have already migrated to cities since the early 1990s. With most of the large cities that have played reluctant host to these “transient workers” saturated, such as Shanghai and Beijing, the Chinese leadership is committed to nurturing hundreds of medium-sized cities to accommodate the newcomers. Yet few details of this plan, perhaps the most ambitious social engineering project in history, have been disclosed in the 11th FYP. One difficulty is that sufficient new jobs have to be created to employ this huge mass of humanity.

Chinese agronomists have noted that the central government would be hard-pressed to bankroll the creation of so many new cities. They said a more practical method would be to give farmers—whose monumental sacrifices since the 1950s have made possible China’s industrialization—their due by awarding them full ownership of their tiny plots of land. According to long-standing practice, land in the countryside is owned by “rural collectives”—not by individual farmers. This murky ownership situation has made it possible for thousands of corrupt local cadres to make a fortune by selling land-use rights to urban developers. This has resulted in farmers being forced to migrate elsewhere after receiving compensation that is worth a mere fraction of their land. The Hu-Wen team, however, has been dragging its feet on land reform, which poses a direct threat to holders of vested interests nationwide.

The central leadership also faces an uphill battle regarding the other major goal of the FYP: propagating more energy-saving, higher value-added industries as well as expanding the services sector. In fact, the call for turning away from so-called cuguang—rough, polluting, and energy-wasting—industries had been made as early as the mid-1990s. While accounting for barely 4 percent of global GDP, however, China last year accounted for 12 percent of the global consumption of energy resources, 15 percent of water, 28 percent of steel, 25 percent of aluminum, and 50 percent of cement. The 11th FYP stipulated that the industrial sector must cut energy use by 20 percent. Yet even the state media admitted last year that Chinese factories had to consume 2.6 tons of standard coal for the creation of every 10,000 yuan worth of GDP, just 7 percent less than the comparable figure 5 years ago.

Clearly more reforms are needed to achieve the FYP’s economic and social objectives. For example, despite China’s accession to the World Trade Organization in 2001, the party and state still control a disproportionately large chunk of the economy. The CCP leadership has no intention of giving up control over about 170 so-called aircraft-carrier companies, which include the major oil, steel, telecommunications, transport, and financial firms and institutions. One of the reasons behind the wastage of fuel is that the prices of oil, gas, and other types of energy have been kept artificially low by the government. Many of the problems bedeviling China’s stock exchanges and the real-estate sector have to do with malfeasant cadres—and their business cronies—manipulating the market thanks to their special powers and access to inside information. By contrast, private entrepreneurs, who should be at the forefront of innovation in both industry and the services, are often unable to compete with companies that have sterling party or government connections.

In a commentary on the 11th FYP, the official New China News Agencies (NCNA) deplored the fact that “institutional and systematic problems hindering the healthy development of the economy and society are still very outstanding.” NCNA hinted at the severity of corruption among senior officials, as well as regional cadres not following orders from the center. Indeed, the Hu-Wen team is facing more challenges from regional “warlords” who often refuse to heed Beijing’s orders concerning the preservation of arable land or the punctual payment of the salaries of migrant workers. The recent case of local authorities in Panyu, Guangdong Province hiring thugs to intimidate villagers who tried to impeach a corrupt village chief has illustrated the frequency with which grassroots cadres collude with greedy businessmen and underworld gangs.

Hu Jintao, however, has continued to insist that there is no need to overhaul the political system. A long-term believer in the “scientific” nature of socialism, the party chief and president is convinced that, provided CCP cadres can hew to their altruistic and uncorrupt nature, the perennial ruling party can still lead China to greater triumphs. The fact of the matter, however, is that the Hu-Wen team’s dream of creating a “harmonious society” of relatively egalitarian income distribution and social justice can never be attained until the party and government are willing to give the people—particularly the lowly peasants and jobless workers—more say in the political process. In the past year, however, the leadership has cracked down on NGOs and professional groups such as lawyers who are helping peasants seek just compensation after being evicted from their land by unscrupulous officials and developers. Beijing has also put a moratorium on the further development of village-level direct elections. Experiments of extending the polls to pick the leaders of towns and townships, which were undertaken during the latter half of ex-president Jiang’s tenure, have basically been shelved.

The 11th FYP has been singularly disappointing insofar as either structural reform of the government or political liberalization is concerned. The document cited the need to “strengthen the construction of socialist democratic politics” and to “respect and safeguard human rights.” At the same time, the Hu-Wen team underscored the imperative of “boosting party leadership” in ideological, cultural, and media fields, including the need to “uphold the correct guidance of public opinion” in accordance with Marxist and other orthodox values. Earlier this month, the State Council published its first-ever White Paper on the Construction of Democratic Politics. The White Paper pointed out that the basic political system of China would still be “the CCP providing leadership for the people in their efforts to be their own masters.” The document noted that the CCP should seek a “synthesis of Marxist theories on democracy and China’s actual conditions” when considering political changes.

The change- and risk-averse nature of the Hu leadership is also evident from a series of articles recently run by the party journal Guo Feng (“Spirit of the Country”) on the secrets behind the staying power of several evergreen political parties in the world. A piece written by theorist Xiao Feng on the Cuban Communist Party heaped lavish praise on how Fidel Castro has stood up to American pressure. Xiao asserted that Cubans had remained strong and defiant thanks to their “firm faith [in socialism] and unyielding spirit.” Xiao cited the famous Castro axiom: “We won’t change the direction of our ship even if we were to sink into the deep sea.” Indeed, in a now-famous internal talk late last year, Hu had praised the Castro and Kim regimes in Cuba and North Korea for effectively preserving the “purity” of Communist ideals. Moreover, a series of ideological campaigns launched this past year by Hu, including a Maoist movement to “preserve the advanced nature” of party members, has been modeled upon the Cuban experience. It is highly doubtful, however, whether the Chinese leadership’s ambitious blueprint for socio-economic take-off could ever be attained through wallowing in the mire of old-style CCP norms.

Willy Wo-Lap Lam is a Senior Fellow at The Jamestown Foundation as well as a Hong Kong-based journalist and analyst.

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