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China aims to prevent unrest by pushing a more 'inclusive' growth

At this week’s annual National People’s Congress, top leaders have been stressing issues such as skyrocketing house prices, worrying inflation, and workers’ wages.

By Staff writer / March 10, 2011

Jobseekers looked at employment information Thursday at a job fair for college graduates in Kunming, Yunnan province. China plans to increase spending on education, social security and employment by 14 percent this year, the finance ministry said on Saturday.

Reuters

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Beijing

As policemen fan out through cities across China to snuff out the slightest sign of North African-style protests, the country’s political leaders are pledging to tackle the economic problems that might spark popular discontent.

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At this week’s annual National People’s Congress (NPC), China’s parliament, speakers from Premier Wen Jiabao on down have been stressing issues such as skyrocketing house prices, worrying inflation, and workers’ wages even above the once-sacred economic growth rate.

While it has so far been “absolutely necessary to make maintaining growth a priority … now we want to put more emphasis on ensuring and improving people’s livelihood,” the country’s top economic planner, Zhang Ping, told reporters last weekend.

This might be easier said than done, some independent economists are warning. “These changes will require a fundamental shift away from China’s current growth model,” says Michael Pettis, professor of finance at Peking University.

Behind the shift in emphasis is a desire to ensure social stability, explains Zhao Xiyun, Deputy Director of the School of Finance at People’s University in Beijing. “That is the single most important thing for the government and the [ruling Communist] party,” he says.

And that stability could be threatened, the authorities worry, if citizens grow dissatisfied with their living standards. “Our work on income distribution, social security, schooling, and medical care still fall considerably short of the demands of the people,” admits the report that the National Development and Reform Commission – the government’s planning ministry – presented this week to the NPC.

The government has often talked in the past about improving the quality of China’s economic growth, and of ensuring a better balance between investment, consumption, and exports – the three engines of that growth.

More often than not, however, local governments have ignored Beijing’s words and “have just sought faster economic growth,” says Professor Zhao.

The NDRC’s report is blunt in this respect. “Local governments…absolutely should not seek rapid growth at all costs or compete for the fastest rate,” it admonishes.

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