Western media analysis of the Communist Party of China (CPC) Central Committee Plenum to consider the outlines of the 13th Five Year Plan was dominated by discussion of the possible GDP growth rate to be set, while immediate news reports focused on replacement of the "one child" family planning policy with a "two child" one. Chinese commentary, in contrast, focussed in a more rounded fashion on the plan's goals for living standards together with social and environmental conditions. This was also the main emphasis specified by the CPC's official goal of achieving a "moderately prosperous society in all respects" by the plan's end in 2020.
It is important to understand why China's, not the Western media's, view of the Plan is correct. Analyzing this also simultaneously clarifies some Western economists' error in saying China does not need Five Year Plans and that a target for GDP growth should be abandoned.
The central economic target of the new plan, around which its key parameters are constructed, is China's goal of doubling the income, and therefore potential consumption, of both its urban and rural population in 2010-2020. This requires essentially similar GDP growth.
But achieving a "moderately prosperous society" includes not only a target for income and consumption but also development of education, health, environmental improvement and other strategic factors. Implementation of the 13th Five Year Plan is intended to constitute the first key milestone in China's overall development as reiterated by Xi Jinping: "We have set the goals of completing the building of a moderately prosperous society in all respects by the centenary of the CPC in 2021 and building China into a modern socialist country that is prosperous, strong, democratic, culturally advanced, and harmonious by the centenary of the PRC in 2049 so as to realize the Chinese Dream of the rejuvenation of the Chinese nation."
In this overall framework a GDP growth target is significant - but as a means and not an end. Achieving GDP growth, in conditions in which China's economy is far more developed than previously, does directly determine the Plan's new economic priorities such as advanced manufacturing, innovation, integration of the internet with other economic sectors and use of "Big Data." But economic growth is simply the Plan's indispensable means to achieve broader human and national goals.
To understand this link between economic development and overall social goals, it should be understood that per capita GDP growth is not socially neutral nor primarily desirable because it results in outputs such as steel and cement. The key point is that per capita GDP growth is highly correlated with extremely desirable human goals such as rising life expectancy, increasing consumption, and improving health and education. Therefore only by closing its gap in per capita GDP with the most developed economies can China achieve the best possible all round living standards for its population.
To illustrate in fundamental terms how economic targets in the new Five Year Plan are correlated with social goals, consider life expectancy - which is the most sensitive indicator of human well-being as changes in this "sum up" the consequences of positives and negatives in overall economic, social, and environmental conditions. Internationally 73 percent of differences in life expectancy between countries are accounted for by per capita GDP differences. Therefore rising per capita GDP produces direct and indirect improvements in social conditions and is why the new Five Year Plan sets the goal of doubling income. It is also why China correctly continues to target a moderate to high growth rate.
But the new parameters created by China's development towards a "moderately prosperous society" substantially affect the new Five Year Plan. Under previous plans China made history's greatest achievements in overcoming poverty. It is staggering fact that since 1981, on World Bank data, China reduced the number of people living in internationally defined poverty by 728 million, while the whole of the rest of the world only achieved 152 million. It remains one of the most important goals to be accomplished during the 13th Five Year Plan that, as Xi Jinping announced, China will lift the final nearly 100 million people from poverty in the country.
But this gigantic historical achievement necessarily creates new challenges. When the decisive task facing China was to overcome low living standards the delivery of essentials such as housing, food and basic products was dominant and almost sufficient. International studies confirm that over 80 percent of increases in a population's consumption are due to GDP increases. Therefore, because economic growth's role in overcoming low living standards is decisive, almost everything became subordinated to it even when, for example, this resulted in environmental damage or unacceptable social inequality. But the social, cultural, environmental and other needs of a population which is achieving "moderate prosperity" are vastly more developed and complex.
There can be direct clashes between GDP growth and human well-being. For example highly polluting factories or power plants are cheaper than those which protect the environment, and can therefore be built more cheaply increasing GDP growth. Under new conditions, with China approaching its goal of eliminating poverty and low incomes, the necessary means of GDP growth remains extremely important but must be subordinated to overall human well-being - the goal. This is why as Hu Angang, one of China's leading economists and an adviser on drawing up the new plan, put it: "In the process of China's reform and opening-up, the five-year plan has been remade… it has become a program for human development, or citizens' needs in all aspects."
Western media failures to admit China's historically unprecedented success in overcoming low incomes means it inaccurately focuses solely on growth rates or individual issues such as the "one child policy" - a classic case of "being unable to see the wood for the trees." In contrast China's analysis of the new plan's role in achieving a "moderately prosperous society in all respects" is spot-on in its framework.
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This article originally appeared at China.org.cn.
