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The Direction of China's Reform and Development and the Opportunities It Presents

February 21, 2008

Zheng Xinli

The Communist Party of China (CPC) convened its 17th National Congress in October 2007. The report delivered by General Secretary Hu Jintao at the congress on behalf of the CPC Central Committee put forward new requirements for attaining the goal of building a moderately prosperous society in all respects by 2020. It also introduced strategies, principles and policies for China's economic, political, cultural and social development in the next few years. The Scientific Outlook on Development was enshrined in the report as an important guiding principle for China's economic and social development. It called on us to observe the following principles while applying the Scientific Outlook on Development:

First, we must always give top priority to development. Development is the key to resolving all China's problems. Without development, we will not be able to achieve modernization. Development enables China to provide for its more than 1 billion people, better undertake its international obligations and make greater contributions to the world economy.

Second, we must put people first as we seek development. We should see to it that development is for the people, by the people and with the people sharing in its fruits. We should respect the democratic rights of the people, give play to the people's creativity, safeguard the people's economic, political, cultural and social interests, seek common prosperity and promote all-round development of the people.

Third, we must pursue sustainable development. We should harmonize economic growth with the population, resources and the environment. We should adopt an enlightened approach to development that results in expanded production, a better life and sound ecological and environmental conditions and build a resource-conserving and environment-friendly society so that our people will live and work under sound ecological and environmental conditions and our economy and society will develop in a sustainable way.

Fourth, we must persist in overall consideration. Overall consideration is a basic approach to balancing the interests of people from all walks of life. We should balance urban and rural development, development among regions, economic and social development, relations between man and nature, and domestic development and opening to the outside world, thus striking a balance in all links and aspects of China's economic, political and cultural development.

The 17th CPC National Congress set new objectives for China's development: We will quadruple the per-capita GDP of the year 2000 by 2020. We will greatly enhance our capacity for independent innovation, enabling scientific and technological advancement to contribute much more to economic growth and making China an innovative country. We will expand socialist democracy and better safeguard the people's rights and interests as well as social equity and justice. We will promote cultural development and notably enhance the cultural and ethical quality of the whole nation. We will accelerate the development of social programs and improve every aspect of the people's well-being. We will further improve the modern system of national education, expand employment and establish a basic system of social security that will cover both urban and rural residents so that everyone is assured of basic living standards. Middle-income people will make up the majority and absolute poverty will basically be eliminated. Everyone will have access to basic medical and health services. We will promote a conservation culture and bring the discharge of major pollutants under effective control.

By 2020, China will have basically accomplished industrialization, with its domestic market ranking as one of the largest in the world. It will be a country whose people are better off and enjoy markedly improved quality of life and a good environment. Its citizens will have more extensive democratic rights and show higher ethical standards. China will have better institutions in all areas and Chinese society will have greater vitality coupled with stability and unity. The country will be still more open and friendly to the outside world and make greater contributions to human civilization.

--Economic development. We will seek to transform the mode of economic development. First, we will adjust the demand structure to promote the transition from relying mainly on investment and export to relying on a well coordinated combination of consumption, investment and export to achieve economic growth.

Second, we will adjust the product mix to promote the transition from secondary industry serving as the major driving force to primary, secondary and tertiary industries jointly driving economic growth.

Third, we will increase investment in technological research and development, put in place a system for technological innovation in which enterprises play the leading role and which combines the efforts of enterprises, universities and research institutes, and promote the transition from relying heavily on increased consumption of material resources to relying mainly on advances in science and technology, improvement in the quality of the workforce and innovation in management.

We will take achieving the three transitions as an important strategic task in the next few years and a fundamental approach to promoting sound and rapid economic development. We will make every effort to propel the transitions and insure their fulfillment.

We will accelerate our efforts to improve China's socialist market economy. First, we will improve our basic economic system. We will unwaveringly consolidate and develop the public sector of the economy, encourage, support and guide the development of the non-public sector, insure equal protection of property rights and create a new situation in which all economic sectors compete on an equal footing and reinforce each other.

Second, we will accelerate the formation of a modern market system that is unified and open and allows orderly competition and develop markets for factors of production.

Third, we will deepen fiscal, taxation and financial restructuring and improve macroeconomic regulation.

Fourth, we will expand opening up in scope and depth and improve our open economy. We will adhere to the basic state policy of opening up and expand the areas of opening up. We will make innovations in the way of using foreign capital, improve the structure of foreign investment utilized and adopt comprehensive measures to maintain a basic equilibrium in the balance of payments.

--Political development. We will make unremitting efforts to develop socialist democracy. We must and integrate the leadership of the Party, the position of the people as masters of the country and the rule of law. We must uphold and improve the system of people's congresses, the system of multiparty cooperation and political consultation under the leadership of the CPC, the system of regional ethnic autonomy and the system of self-governance at the primary level of society. On the basis of ensuring the people's position as masters of the country, we will expand socialist democracy, build a socialist country under the rule of law and develop socialist political civilization to enhance the vitality of the Party and the state and arouse the initiative of the people.

--Cultural development. We will promote vigorous development and prosperity of socialist culture. We will stimulate cultural innovation and develop the productive forces in the filed of culture. We will encourage the creation of more excellent, popular works that reflect the people's principal position in the country and their real life.

--Social development. We will accelerate social development with the focus on improving people's livelihoods. We will give priority to education and turn China into a country rich in human resources. In order to create equal opportunities and foster social equity, we must first of all achieve equality in education, the starting point of life. We will implement a development strategy that promotes job creation and encourage entrepreneurship to create more employment opportunities.

We will deepen reform of the income distribution system and increase the income of urban and rural residents. A proper balance will be struck between efficiency and equity in both primary distribution and redistribution. We will increase the share of personal income in the distribution of national income and raise that of work remuneration in primary distribution. We will gradually reverse the growing income disparity. We will accelerate the establishment of a social security system covering both urban and rural residents and guarantee their basic living conditions. We will establish a basic medical and health care system and improve the health of the whole nation. We will improve social management, safeguard social stability and unity and concentrate on building a harmonious socialist society.

The 17th CPC National Congress once again demonstrated to the world China's determination to pursue peaceful development. Peaceful development is a major historical decision made by the CPC and the Chinese Government at this new stage in the new century and their solemn commitment to the world. The decision to follow the path of peaceful development is based on China's national conditions, cultural traditions and the trend of the world. The essence of China's peaceful development is to secure a peaceful international environment for its development and at the same time promote and safeguard world peace through its development. China stands for enhancing international cooperation, liberalizing and facilitating world trade and investment and eradicating various trade barriers.

China's future development presents unprecedented opportunities to expand foreign trade and investment. Given the natural complementarities in Chinese and Australian economies, the two countries have great potential for increasing their bilateral trade and investment.

--The ever-growing demands in the Chinese market have offered a historical opportunity for Australia to increase its exports to China. China's total imports valued at $955.8 billion in 2007, up 20.8 percent from the previous year. In the next 12 years, its total imports are projected to exceed $12 trillion. China's crude steel output stood at 490 million tons in 2007 and is expected to reach 600 million tons by 2012. Its output of aluminum and copper will grow as rapidly as that of iron and steel. Its demands for iron ore, alumina, copper ore and nickel ore will maintain robust growth. With its energy demand growing by more than 6 percent, China will import more oil, natural gas and coal. Given the development of its wool textile industry, its import of wool is bound to rise. Population growth, the change in the food structure and the decline of cultivated land have made it necessary for China to import more agricultural products including food and animal feed. Australia has a competitive advantage in the export of all these products. Increased export to China will fuel the development of related industries in Australia and help expand its employment. China is currently Australia's the largest trade partner and major source of trade surplus. I believe it will soon become Australia's largest export market and remain so for a long time.

At the same time, China's electronic and IT products, electromechanical products, clothes, textiles, shoes, toys and furniture are highly competitive in the Australian market. Two-way trade between China and Australia will exceed $60 billion by 2010. The expanding bilateral trade will benefit companies and consumers in both countries. We hope that progress will soon be made in the negotiations on a bilateral free trade agreement between the two countries.

--There is great potential for increasing two-way investment between China and Australia. China will open up more areas to the outside world, improve its utilization of foreign investment and encourage foreign investment in areas conducive to promoting the country's independent innovation and industrial upgrading and its central and western regions. Australian companies have been engaged in the exploration and mining of nickel, copper and gold in China. Australia's four largest commercial banks have all set up offices or subsidiaries in China, offering such services as insurance, fund management and real estate investment. Chinese companies have started to invest in energy and resources industry in Australia. Expanding two-way investment will help China and Australia achieve stable growth in their trade relations.

--The cooperation between China and Australia in the fields of science and technology and education has a good foundation and bright prospects. Adhering to the strategy of revitalizing the country by relying on science and technology, China has increased investment in science and technology and education. Australia boasts advanced science and technology. The two countries have carried out nearly 100 cooperative projects in the fields of agriculture, nuclear technology, metallurgy, geology, meteorology, space, the environment, biology and medicine and yielded positive results. We should explore new areas for cooperation in the future.

China is the largest source of foreign students in Australia. The number of Chinese students in Australia has been rapidly on the rise, research 100 thousands till now. The Center for International Economics of Australia estimated that students from the Chinese mainland would total more than 120,000 in Australia by 2020, generating an annual revenue of 2.4 billion Australian dollars for the country. As many Australian universities run programs in collaboration with their Chinese counterparts, Australia is poised to reap even more benefits from China's education market.

--China is the most rapidly growing foreign tourism market of Australia. In the next decade, the number of Chinese tourists to Australia is estimated to grow by more than 15 percent annually and reach 1.4 million by 2012, making China the Australia's largest source of foreign tourists. Chinese tourists stay for an average of about 10 days and spend 2,200 Australian dollars on a per-capita basis in Australia, much higher than the corresponding indexes for Japanese tourists, according to statistics of Tourism Australia.

China's GDP hit $3.378 trillion in 2007, $2,570 on a per-capita basis. It is projected to reach $7.5 trillion by 2020 based on the current prices and exchange rate, with its per-capita GDP exceeding $6,000. Along with the growth of China's economy and the Chinese people's income, the cooperation between China and Australia in trade, investment and tourism is bound to expand in a stable and rapid manner. The opportunities created by China's development belong not only to the Chinese people but also to all the countries and companies willing to conduct economic exchanges with China. Let us join hands to create a bright future for China-Australia cooperation!

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