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NO.17 (September 1, 2003)

  • Spurring Simultaneous Development of the Economy and Society
  • Chinese Society Opens Wider to the Outside World
  • Overseas Investors Display Increased Confidence in China
  • Needy University Students Financed in Various Ways

    Spurring Simultaneous Development Of the Economy and Society

    ――Interview with Hu Angang, director of the National Conditions Research Center of the Chinese Academe of Sciences and Tsinghua University

    People's Interests Come First

    Economic Daily: At a discussion meeting with experts on June 17, Premier Wen Jiabao stated that in the new stage of building a well-off society in an all-round way and accelerating the modernization drive, it is essential to maintain a coordinated development of both the economy and society and of urban and rural areas, the harmonious coexistence of man and nature and sustainable development, and strive to enhance the people's material and cultural well-being and health. As one of the experts participating in this meeting, what are your views on how the relationship between economic construction and social development should be defined and appropriately handled?
    Hu Angang: I totally agree with Premier Wen's remarks. In my view, economic construction and social development must advance in coordination with each other and help each other forward. The development strategy should put people's interests first, and the government's leading role in social progress should be strengthened. The development concept in the early stages centered on materials and GDP. To date, a growing number of countries and regions have taken on a strategy that focuses on people. The ultimate goal is to achieve socioeconomic progress that fulfils the needs of people, and growth should be pursued to serve public interests. We should not simply pay attention to economic progress, but should attach importance to the 1.3 billion people's growing demand for material and cultural well-being, including the basic demand of all people for subsistence, particularly of those in poverty. Then, efforts should be made to enhance the people's living standards and the level of public services.

    Simultaneous Development
    Economic Daily: Deng Xiaoping, the late Chinese leader and chief architect of China's reform and opening-up program, said, "Development is a cardinal principle." How do you interpret this remark?
    Hu: The statement that development is a cardinal principle does not mean the growth of GDP is a cardinal principle, since the growth of GDP is not equivalent to development. In many developing countries, the growth of GDP has not brought about improvement in the people's living standards and all-round social progress. So development includes both economic development and social progress, and not only the progress of people at the present time, but also the sustainable development of later generations. While allowing some areas and some people to get rich first, development should also benefit people still living in poverty. Furthermore, development should narrow the gap between different regions in respect to both economic and social progress.
    Economic Daily: How would you view the contradictions in the allocation of limited capital? Should it be used to spur economic growth or to promote human progress?
    Hu: In the short run, economic growth and human development are mutually independent and sometimes are even mutually contradictory. But in the long run, the two can promote each other's progress. Economic growth and social progress, likened to two wheels in the development of human society, call for mutual coordination and simultaneous advance. A faster advance of either one may result in economic slowdown or social instability.
    Economic Daily: In a highly integrated society such as the one we live in, changes in any aspect may affect economic development, Take the impact of SARS on China's economy a few months ago for example. Many people believe that social progress helps stabilize economic operation.

    Hu: It's true. It's worth noting, however, that the coordination of economic and social development does not occur automatically. It is subject to the implementation of effective policies. Hence, the government's policy decisions play a decisive role. The government's basic responsibility is to provide all citizens with public utilities and public services. The government is responsible for narrowing the income gap between urban and rural residents and between the people living in different regions, and also the gap in public services available to them. The government should increase the ratio of expenditures on education, public health, family planning, poverty relief, environmental protection and other social undertakings, and restructure the spending on public services, so as to enlarge the number of people who stand to benefit.

    Giving Priority to People's Health and Well-Being
    Economic Daily: Could you please explain the relationship between socioeconomic development on the one hand and public hygiene and people's health on the other?
    Hu: The basic situation in China's public health administration has the following five characteristics: First, owing to limited resources, China has to implement a principle of "low level, low coverage rate and high efficiency" to deal with the medicare problem of its 1.3 billion people. Second, China's per-capita medical expenditure is lower than the world's average level, and multiple fund-raising channels are called for. Third, the coverage rate and development of health-related service facilities rank far below the international level. Fourth, a big gap exists between urban and rural areas in the distribution and service scope of public health resources. Fifth, there is a noticeable regional gap in the distribution and service scope of public health resources.
    Under these circumstances, investing in health undertakings to improve the citizens' health level and increase the public health service of the whole society is both the goal of development and an essential condition for enhancing labor productivity, accelerating economic growth and promoting social progress. International and domestic experience proves that returns from investment in public health far exceed losses caused by health problems. Therefore, investment in this field is highly effective.
    On this basis, we suggest that the idea of enhancing the people's health and welfare should be established as a priority. In accordance with this idea, the government's public policy should give priority to investment in people's health, the macro-economic policy should help improve the people's health level, the government's responsibilities in the health sector should be redefined, and the destination of input in health undertakings should be readjusted.

    Shifting Emphasis of Investment To Rural Areas
    Economic Daily: In spite of rapid socioeconomic development over the past 20-odd years, construction of China's public health system has lagged far behind. The development of public health undertakings and the medicare industry lags behind that of other sectors as well. The Central Government attached great importance to SARS prevention and control. After the out-break of the disease, funds were continuously allocated for the building of a public health system, and will surely be used to speed up its overall construction in the long run.
    Hu: I hope capital input like this will continue. In my view, investment in public health should be the core of the strategy for the next-step reform and development of the health sector. Apart from investment, the government should promote the spread of knowledge and information on public hygiene and health care. The spread of knowledge concerning health should be considered a public undertaking to be provided for the people. Disease prevention and popularizing knowledge of health protection measures are more efficient than disease treatment. In addition, public health should be subject to supervision and monitoring.
    The government's responsibility for the development of public health undertakings in rural areas should be reinforced. Priority for government investment in public health should be shifted from cities and large hospitals to rural areas and grass-roots health institutions. Public health resources, however limited, should be channeled to the prevention and control of infectious and endemic diseases, malnutrition and diseases of women and children in rural areas, as well as to basic medicare service. The rural basic health care system should follow the principle of "prevention first" and strive to reduce both the incidence of disease and the cost of treatment. The government should also play a leading role in the establishment of a medicare guarantee system that suits the current stage of rural development.

    Chinese Society Opens Wider to the Outside World

    Chinese society is opening wider to the outside world. This has been confirmed by worldwide public opinion since the World Health Organization (WHO) lifted its travel advisory against Beijing and removed the city from SARS-affected areas on June 24, though the daily report of the epidemic situation by a news spokesman of the Ministry of Health now no longer appears on TV.
    The WHO spoke highly of the outstanding performance of the Chinese Government in the fight against SARS, pointing out that it has honored its commitments and ensured the sharing of information in a prompt and transparent manner.
    People have noticed that China is placing greater importance on the release of information through its administrative channels. In June, Shanghai Municipality, which stands in the forefront of China's reform and opening-up drive, established a news release system in various government departments to provide information to the public on a regular basis. Soon afterwards, a similar news release system was set up in the inland province of Henan and in the coastal province of Shandong. Earlier, the Chinese Government promptly reported a submarine accident, and made public the all-round measures for handling it as well.
    Observers have commented that the aforementioned steps that were taken in the second quarter of this year were not unexpected. In fact, many earlier accounts from the Chinese leadership continuously transmitted the information that the country had been opening wider and wider to the outside world. The fact that the public acquired extensive information promptly during both the 16th National Party Congress held last year and the sessions of the National People's Congress and the Chinese People's Political Consultative Conference in spring this Year already attracted international attention.
    Chinese media covered other incidents that occurred this year in a similarly prompt, comprehensive and detailed way, such as the earthquake in the Xinjiang Uygur Autonomous Region, the explosion at a Tsinghua University canteen and the hostage incident at Reuters' Beijing Branch.
    "In essence, these examples of information release and exchange indicate that Chinese society is opening wider to the outside world," said Prof. Yu Guoming from the School of Journalism at the People's University of China.
    China is an agricultural country with a history of 5,000 years. Throughout the long-term rule under the feudal system, the people were unable to see the operational process of state power. The country still remained isolated during a period of time after the founding of New China in 1949, owing to blockade by Western powers and other reasons. The period between 1978 (when China introduced reform and opening-up policies) and 2001 (when China entered the World Trade Organization) witnessed ever-wider opening-up of the Chinese economy and society.
    Last year, a foreigner was elected a member of a neighborhood committee in Shanghai. This year, the city of Wenzhou in Zhejiang Province invited foreigners to attend its people's congress session as observers. On the eve of May Day this year, a number of foreigners in Beijing and Guangdong Province were cited as model workers. All this indicates an open society in China. Diverse cultures have emerged; works with utterly different artistic styles have been published; controversial opinions can be expressed through various channels; and the public are encouraged to make criticisms and suggestions regarding the work of governments at all levels. Hunan, native province of the late Chairman Mao Zedong, invited citizen representatives to attend this year's session of its people's congress as observers and broadcast live on TV and the Internet the whole process of government official appointment and dismissal.
    Observers attributed all this to China's rapid socioeconomic development, the government's growing experience in administration and continuous improvement in the country's legal system. These features also demonstrate how Chinese society is opening wider and wider to the outside world.

    Overseas Investors Display Increased Confidence in China

    Immediately after the World Health Organization lifted its travel advisory against Beijing and removed the city from the list of SARS-affected areas on June 24, Steve Van Andel, chairman of the prestigious US-based multinational Amway and president of the International Policy Committee of the American Chamber of Commerce, paid another visit to China, and declared that his company would invest an additional US$120 million in China. The move once again indicates that multinationals would not slowdown their investment in China owing to the impact of SARS. During the outbreak of SARS, Chairman Andel, meeting with the Chinese press on several occasions in the United States, expressed his confidence in the prospects of China's market. His latest visit to attend the ceremony marking additional investment once again indicates Amway's undiminished confidence in China.
    With its 1.28 billion people, China boasts a potential market that overseas investors find irresistible, noted a recent AFP news release. According to the report, some overseas businesses have translated their correct assessment of China's economy into the practical action of investing in the country. On May 15, the Sweden-based Ikea, the world's largest household goods retailer, signed a cooperation contract worth US$60 million with the Beijing Taide Co. for the construction of a 30,000-squaremeter retail sales outlet. On May 17, Motorola CEO visited Beijing as scheduled and signed a cooperation memorandum for investing US$90 million to set up an R&D center in Beijing. On June 10, construction of the first branch of the Thailand-based Ek Chor Lotus Supermarket was launched in Beijing. At the end of June, the first Beijing-based chain store of the global retail giant Wal-Mart opened. On August l, the COOC Shell Petrochemical Co. Ltd., the largest Sino-foreign joint venture funded by China Offshore Oil Co. (COOC) and the Shell Co., was founded in Huizhou, Guangdong Province. The project, with each partner contributing 50 percent of the total investment of US$4.46 billion, is expected to produce 800,000 tons of ethylene annually upon completion by the end of 2005. Not one of the foreign investors that had planned to set up l0 commercial joint ventures in Beijing this year changed its schedule owing to the impact of SARS.
    Political stability, rapid economic development and investment security have turned China into a choice destination for overseas investment. Foreign investors' confidence in China in spite of the attack of SARS, first of all, is based on the Chinese Government's great adaptability, credibility and grasp of social mobilization manifested in the fight against SARS. The performance of the Chinese Government enabled overseas investors to realize and appreciate its responsible attitude toward the people, the country and the world. As Mr. Steve Van Andel noted, the prompt and firm measures taken by the Chinese Government in the fight against SARS enhanced the confidence of China's trading partners, proprietors and investors, and all this was bound to help China maintain sustained economic development.
    The sudden crisis of SARS did not change China's advantages in attracting overseas investment. The tremendous scope of China's potential market, low-cost labor and immense manufacturing capacity have provided multinationals with a huge market for competition. Since China's WTO accession, the scope of foreign investment in the country has expanded continuously, and government policies have become increasingly transparent and complete. This has further inspired overseas investors' confidence. To date, more than 400 of the global top 500 multinationals have invested in China. Without exception, they agree that with the effective control over SARS, China still boasts the most attractive investment environment in the world.

    Needy University Students Financed In Various Ways

    China has introduced various channels for financing university students in financial difficulties to ensure that not one of them gives up enrolment or drops out of school on that account. These methods include scholarships, bank loans, work-study programs, special subsidies and tuition lee exemption or reduction.

    --Scholarships. The state has established three kinds of awards for university and college students who excel in ethics, intellectual ability, sports, aesthetics and physical labor (the number of recipients in this category does not exceed 35 percent of the total enrolment), for those majoring in such specialties as agriculture and forestry, teacher-training, sports, ethnic minorities and navigation, and for those who after graduation will engage in coal, mining or oil industries, geology or water conservancy in border or poverty-stricken areas.    

    --Bank loans. The loans, launched by the People's Bank of China, the Ministry of Finance and the Ministry of Education in 1999, are offered by China's four state-owned commercial banks to students who enjoy good credibility and whose income from school (including scholarships and various subsidies) is not sufficient to pay their tuition fees and living expenses. In general, the number of recipients does not exceed 20 percent of the total enrolment. Each eligible student can receive a loan of 8,000 yuan a year. A student pays only 50 percent of the interest on the loan, the remainder being subsidized by the state treasury. In general, the term of such a loan does not exceed eight years, and the loanee should pay off the total sum within four years after graduation.
    --Work-study programs. Students in financial difficulties can earn money in school work-study programs that include jobs in teaching, scientific research, management and campus environment maintenance.
    --Special Subsidies. The government annually allocates special funds to help students from rural, remote or border areas who face serious financial difficulties.
    --Tuition fee exemption or reduction. Students majoring in some special disciplines and those who have serious financial difficulties, particularly orphaned, disabled and minority students, enjoy exemption or reduction of tuition fees. Students in financial difficulty whose monthly income from school is under the local poverty line are exempt from all tuition fees. Children of laid-off workers may enjoy reduction of tuition fees in light of their special circumstances.

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