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ANALYSIS-With Congress over, China charts fast-growth path

24 Oct 2007 05:47:00 GMT
Source: Reuters

BEIJING, Oct 24 (Reuters) - As the dust settles on China's Communist Party Congress, academic and market economists are unanimous that fast growth remains the overriding priority for the leaders of the world's fourth-largest economy.

"Economic growth, or economic development, still comes first," said Song Guoqing, a prominent economist at Peking University.

Song said he had been worried going into the Congress, which ended on Monday, that President Hu Jintao's emphasis on narrowing China's wealth gap and reducing damage to the environment could bring about a sudden drop in growth.

Hu got the Congress to encapsulate his slogan "scientific development" -- shorthand for environmental protection and fairer wealth distribution -- in the Party constitution.

But Song said he was relieved after reading the documents for the five-yearly Congress, especially Hu's main report.

"To some extent, it attached even greater importance to economic development than the past," Song said at a faculty meeting on Tuesday to study the outcome of the gathering.

Indeed, Xiao Qun, a social sciences researcher, said a computer wordcount showed "development" and "economy" were the two words used most by Hu, who was confirmed as Party secretary for a second five-year term.

Xiao said the word "development" has been the word used most often in the last four reports to Congress by the Party boss; it merited 273 mentions this year compared with 156 in 1992.

As such, Hu's speech spelt continuity with the priorities set by former paramount leader Deng Xiaoping, the pioneer of China's market reforms and champion of all-out growth.

"It is in line with Deng's saying 'Development is the hard truth'," said Xiao.

ACHIEVABLE GOAL

Reflecting the importance of fast growth, the only hard target in Hu's report was the goal of quadrupling per capita gross domestic product between 2000 and 2020, by which point China would be a "moderately prosperous society".

In fact, as China has grown by double-digits since 2003, the goal is quite conservative.

Professor Cai Zhizhou was quoted by Xinhua news agency as saying China needs average growth of just 6 percent a year until 2020 to meet Hu's target.

That could mean more leeway to emphasise "green growth" and sharing out China's wealth more fairly.

But Zhou Zhiren, a professor with the School of Government, said there had to be a question mark next to Hu's ability to put scientific development into practice in a political system that has hitherto prized growth above everything else.

"Everybody can say 'It's great, it's great'. But the problem is how it fits in with real conditions on the ground, in industry and in various fiefdoms," said Zhou.

Despite talk for the past five years about resource efficiency, new government buildings are getting increasingly luxurious and administration costs are soaring, Zhou said.

"The central government has repeatedly ordered a slowdown in investments, but local governments are starting new projects at any cost," the professor said.

Qu Hongbin, chief China economist of HSBC in Hong Kong, took heart from the promotion to the politburo of several younger leaders with hands-on economic experience.

Qu singled out Beijing mayor Wang Qishan, who he said was a candidate for a leading economic job as a vice-premier.

"Putting an experienced person in charge of economic and financial issues should help Beijing to make more decisive moves to address the problems of an asset bubble and economic overheating in the coming years," Qu said in a note to clients.

But Jason Kindopp with New York political consultancy Eurasia said he did not expect a sharp break with previous policy trends. Hu's report had signalled as much, he wrote in a report.

"Not only did he affirm economic development as the party's primary goal, but he also listed technological innovation as the top economic policy priority. This suggests that Hu will seek to "upgrade" out of China's energy and environmental challenges in much the same way his predecessors sought to grow their way out of the challenges of early industrialisation," Kindopp said.

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Last updated:Wed Oct 24 05:47:08 2007