Two sessions in Beijing to grapple with decline in economic growth
Print Edition
ALMOST no one eats there any more, and it’s not making any money: the last remaining noodle bar outside the Yunfeng steel plant in Wu’an cannot be long for this world.
It seems destined to go the same way as many other small shops in the area that have already closed.
“The steel plant is running at a loss. Some contracted laborers have been laid off,” said its owner.
The plant in north China’s Hebei Province has cut its labor force from 1,800 in its prime years to around 800 today.
Wu’an, 400 kilometers south of Beijing, once had 18 iron and steel plants. Many have cut production. Some have closed for good.
Hebei, the country’s leading iron and steel producer, plans to cut iron and steel capacity by 18 million tons this year.
Last year, policy-makers came up with supply-side structural reform as the latest magic bullet to deal with a number of industrial ills by cutting overcapacity, destocking, deleveraging, reducing costs and identifying growth areas.
Supply-side structural reform will be a key phrase at this week’s “two sessions” — the annual gatherings of the national legislative and political advisory bodies, analysts predict.
China’s growth prospects this year are the subject of global concern.
“I believe China will realize 6.5 percent or better GDP growth in 2016, a difficult feat, given the unstable global economy,” said Shlomo Maital, a professor at the Technion — Israel Institute of Technology.
China saw a record number of startups in 2015, with 4.44 million companies established, up 21.6 percent from 2014.
“China, like Israel, can become a startup nation,” said Maital. “Part of the Chinese dream can be a dream about starting your own business.”
To avoid the middle-income trap, he said, China will need to raise its “total factor productivity,” which demands innovation and improvements, not more use of resources.
China plans to take another 70 million people out of poverty in the next five years.
Visiting Shenshan, a village in east China’s Jiangxi Province, last month, President Xi Jinping said: “Not a single family living in poverty is to be left behind on our path to ending poverty.”
Villager Zhang Chengde, 63, doubled his income to about 8,000 yuan (US$1,200) in 2015 by raising goats thanks to kids given as part of a poverty reduction campaign.
Zhang’s son is 29 and still a bachelor, partly due to poverty. He will not seek a job in a city this year, believing that helping his father expand the size of his herd will be more rewarding.
According to a proposal in the 13th Five-Year Plan, the quality of free trade zones will be improved and more set up.
Besides the four in Shanghai, Tianjin, Fujian and Guangdong, a number of other provincial areas have applied.
Liaoning Province in the northeast, said in its provincial 13th Five-Year Plan that it will seek approval for a free trade zone in its port city of Dalian. The economy in Liaoning, part of the old industrial belt, grew just 3 percent last year.
The interaction of the free trade zones, the Belt and Road Initiative, the integration of Beijing, Tianjin and Hebei, among other strategies, will help produce a more balanced development and reshape the opening up policy, officials say.
They said the “Two Sessions” will show how China perceives its path and the methods it will use to handle the challenges ahead. New governance concepts and strategies will also be widely illustrated across all agendas at the sessions this year, they added.
China’s shift from a low-wage manufacturing economy driven by exports and infrastructure investment to a medium-wage economy driven by services and consumption is mainly driven by the growing middle class, Maital said.
“Global businesses are aware of China’s huge and growing market and the new middle class. They are aware that China is one of the few markets in the world that are growing strongly.”
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