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Opinion / Op-Ed Contributors

Chinese economy will not derail

By Qiao Xinsheng (China Daily) Updated: 2011-08-16 08:10

China will take self-adjusting measures to ensure growth and choose the right mode for continued development

The high-speed railway accident in Wenzhou, Zhejiang province has received considerable attention both at home and abroad. The Chinese government has adjusted its railway development plan and reduced the operating speeds of the nation's high-speed railways following the tragedy and some media abroad have made a great fuss about this, claiming the Chinese economy has derailed.

Their gloating over other's misfortune is unpleasant, especially as there have been high-speed railway accidents in developed countries. The crash in Wenzhou was related to human factors. Running different kinds of trains on the same high-speed railway added to the work of dispatchers and increased the possibility of accident. The railway authority has changed the railway schedules to prevent such problems. But this should not be taken to mean the development of high-speed railways has stopped, or that it signals the derailing of the Chinese economy.

Even when it was first proposed, there were different opinions of which direction China's high-speed railway should take. Some scholars proposed the high-speed network integrate into the existing railway network as much as possible. While some scholars supported developing maglev trains to increase the operating speed of China's railway to the fullest. Even after the high-speed railway development plan was settled, some scholars advocated the high-speed lines should be applied to freight transportation, with traditional lines being improved for passenger trains.

However, the decision-makers decided the high-speed lines would run passenger services. China has a large volume of passenger traffic and raising the operating speeds of railways was seen as a way of keeping it moving. This was the choice China made, but there were huge costs involved whatever option was chosen.

After years of fast development, China's development is confronted by a series of problems. The wealth gap is becoming bigger and bigger and so are imbalances among different regions. The revenue imbalance between central and local governments has also yet to be effectively addressed.

The central government is introducing a series of macro-control measures to address the conflicts at fundamental levels in China's economic development. That is to say, the macro-control measures taken by the Chinese government are not remedial actions, but a self-adjustment to correct the development direction and choose the right mode for continued economic development.

However, the economic crisis and heavy debt burden of developed countries have seriously weakened global economic development, and in the process of industrial structural adjustment governments at various levels in China have become cornered by interest groups.

The Chinese government must make efforts to ensure a stable economy and it must relieve the pressure coming from these interest groups by accelerating reform at home. But the future of the Chinese economy is firmly held by the central government, so it cannot be derailed. On the contrary, China's economy will continue to develop fast.

Overseas observers usually have a one-sided picture of China's problems, and they ignore the larger picture. China's economy is led by the government and as long as it holds such huge resources, it can effectively face up to all kinds of crisis and challenges. Whenever the market economy of other countries is hit a by periodical crisis, the Chinese government can address the crisis in a timely manner with all its will and resources. China has become a means of balancing the world economy to some extent and in most cases it acts as a leader when the world economy is in difficulties. This is an unstoppable trend.

When Western observers analyze China's problems, many are often very naive for they follow an outdated mentality. The so-called experts on China are to blame for this. They lack a basic understanding of China and lack the ability to make insightful comments.

China is experiencing growing pains and the Chinese government must learn to find its own development road, because there is no existing development model that China can follow. China must rise above all kinds of rumors and malicious gossip on the road ahead. China must remain calm in the face of accusations that it is a threat or claims that its economy will collapse.

The Chinese people are unhappy that some Western media have connected the Wenzhou high-speed rail accident with flaws in the country's development and are predicting the Chinese economy will derail. China will surely come across all kinds of difficulties as well as teasing and mocking as it develops, but as long as China remains calm, there is no reason for it to heed these noises.

The biggest problem for the Chinese economy now is the coordination between the central and local governments. Ever since the tax division reform in the 1990s, the relationship between the central and local governments has been in an unusual state. The central government should give local governments more initiative through fiscal system reforms. The National People's Congress should be further improved to entitle representatives to oversee the government's allocation of resources. Otherwise, it will be very difficult to solve the problems and eliminate the uncertainty factors in China's future economic development.

The author is the dean of the Social Development Research Center with Zhongnan University of Economics and Law.

(China Daily 08/16/2011 page8)

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