China's way: Firm, gradual, holistic

By Ricardo Melendez-Ortiz  |   2008-11-4  |     NEWSPAPER EDITION

THE last three decades witnessed China's change from a centrally planned system to a more market-oriented one.

The restructuring of the economy and resulting efficiency gains have contributed to a more than 10-fold increase in GDP since 1978.

Nevertheless, fast economic and trade growth has raised daunting challenges both within and beyond China.

Sustainability at home is the foremost challenge. China's export-led growth created many structural problems such as imbalance of economy, overinvestment in tradable sectors and lack of development of environmental sectors.

Fast urbanization and industrialization each year created 140 million migrants from rural area to cities.

Nearly 130 million Chinese, 10 per cent of the whole population, fall below international poverty lines.

China now has a better position to address these challenges than three decades ago, thanks to not only its incredible material richness, but also, perhaps more important, its accumulated policy experiences.

China's gradualist but firm and holistic approach to its reform and opening-up can provide a good foundation for China's sustainable development in the future.

I'd like to share with Chinese readers some comments as possible considerations for China to upgrade its path in a more harmonious direction.

First, at the national level, China may need to consistently promote a market economy and reform of governance structure to that end.

Second, China may need to capitalize local initiatives by encouraging institutional and technical innovation.

Starting pilot projects at the local level is one of the most impressive features of China's step-by-step reforms.

China is heading in the right direction when it improves transparency within the government, within factories and in village affairs.

(The author heads the Int'l Center for Trade and Sustainable Development, Geneva.)