Opinion

Improving livelihood is the focus

By Yi Xianrong (China Daily)
Updated: 2009-12-09 07:57

The annual Central Economic Work Conference that concluded on Monday reaffirmed the need to maintain economic growth as the country's main goal next year.

To reach the target against the backdrop of the global economic slowdown, the highest-level economic decision-making conference vowed to boost domestic demand, consumer-led demand in particular, and improve people's livelihoods as one of the main means of stimulating economic development.

Amidst the gloomy external economic environment, the Chinese government made economic growth the top priority and launched a raft of economic stimulus packages, which lifted consumer confidence, stabilized market expectations and promoted much-needed growth. They also played a positive role in helping the country press ahead with proactive fiscal and moderately loose monetary polices.

Nevertheless, such emergency measures during a major crisis have also left the country's long-term economic development faced with enormous risks and precarious factors.

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Theoretically, the main aim of a country's economic development should be to improve the living conditions and welfare of its people. Or else, the country's economic activities would be largely founded on a short-sighted perception and result in an exhaustive use of its limited resources and low-efficiency economic operations, which would certainly be unfavorable to the long-term economic development and social stability.

Take the real estate market as an example. The aim of the sector's development, for any government, should be to improve people's housing conditions. However, in China, housing has turned speculative. Should homes be used as a tool to make money instead of being places to live in, the nature of the real estate market as a means to improve people's livelihood would fundamentally change.

Once it becomes a target of investment and speculation, house prices will be pushed sky high by profiteering capital. It is, indeed, true that the rapid rise in house prices help boost the profits of real estate developers, local revenues and the scale of credit by commercial banks. Due to its propulsive role, a lot of other industries will also get a big boost. Consequently, the country's gross domestic product (GDP) will expand. However, such a housing market boom runs counter to the country's original aspiration to develop the real estate market in order to improve people's standard of living. Also, economic growth mainly driven by a speculative real estate market is not expected to last long.

At a recent Communist Party of China (CPC) Central Committee Political Bureau meeting, the Party authorities vowed to raise the quality and efficiency of the country's economic growth and focus on improving people's livelihood, and maintaining social harmony and stability. An explicit message from the meeting is that the authorities have realized that GDP and lending expansion should not be taken as the only measurement of the country's economic growth, and that the government should take into account the improvement of ordinary people's living conditions and balanced development between the country's short- and long-term goals when assessing national economic growth. The authorities clearly signaled that the country would work harder to adjust its long-standing GDP-oriented economic structure and try to strike a balance between investment, consumption and exports, and between different industries. An economic development model that does not fully appreciate quality would fail to grow healthily, and worse, waste resources and cause environmental pollution. The commitment to improve people's livelihood means that the government will do more in areas closely related with people's livelihood, such as education, labor, healthcare, pension and housing.

The government has increased a lot of input in the country's long-derided educational, medical care and housing systems in recent years, especially following the launch of the $586-billion stimulus package late last year. However, that is still short of people's expectations, largely because of the ever-widening income gap between the rich and poor, as reflected not only in the sluggish income growth of middle- and low-income people, but also in the low ratio of workers' income in the country's wealth distribution. Such kind of wealth composition has been the main reason behind the country's failure to stimulate domestic demand although a series of policies and measures have been adopted.

When it comes to the housing market, which is most closely linked to ordinary people's livelihood, the soaring prices have shut out many common salary earners, especially low- and middle-income groups. More and more people have come to realize that the country's economic growth, no matter how fast, is meaningless if it is achieved at the expense of the interests of the overwhelming majority of people.

That could explain why both the recent CPC Central Committee Political Bureau meeting and the just-concluded Central Economic Work Conference put the emphasis on improving people's livelihood and boosting the demand of ordinary people.

The author is a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences.