Source: Sociology perspective

According to the report delivered at the 19th CPC National Congress, with decades of hard work, socialism with Chinese characteristics has crossed the threshold into a new era. This is a new historic juncture in China’s development. In the new era, China’s development will have some new characteristics, face some unprecedented challenges and show some new trends.

I. New Characteristics of China’s Development in the New Era

China’s development will show some new characteristics typical of the stage in the new era. Accurately identifying the new characteristics is important for China to make new judgment, propose new ideas, develop new strategies, and implement new moves.

1. To achieve a historic transformation, from standing up and growing rich to becoming strong

Since modern times, the Chinese nation has endured many hardships, and countless dedicated patriots struggled with their blood and lives to find a path to make the country strong and the people rich. The founding of New China symbolized that the Chinese people stood up; the tremendous achievements made since China’s reform and opening-up show that the Chinese people have become increasingly rich; socialism with Chinese characteristics for the new era marked the start of a journey to a great modern socialist country, in every dimension.

2. Socialism with Chinese characteristics will have worldwide influence

The drastic changes in Eastern Europe and the collapse of the Soviet Union were once viewed by Westerners as the “end of history” and the victory of capitalism. The tide of democratization seen in some West Asian and North African countries was once deemed as the symbol of the global victory of capitalism. Despite the complex and changing situations across the world, China has adhered to developing socialism with Chinese characteristics. Over the past four decades since its reform and opening-up, China has undergone tremendous changes. It has achieved continued and fast development of its economy, and become the world’s second biggest economy by aggregate. With per capita GDP above US$8,000, it has entered the stage from a middle-income country to a high-income country. The Chinese people lead a constantly improved life and are fully confident about the future. China provides a new solution to human development, contributes wisdom and plans to the world, and offers completely new options for developing countries to become modernized.

3. To embark on a journey to socialist modernization

Developing long-term plans and implementing them is a feature of China’s development. After adopting the policy of reform and opening-up, China laid out three strategic goals known as: ensuring that people's basic needs are met; ensuring that their lives are generally decent; and achieving socialist modernization in China. In the new era, China further drew up a two-stage development plan. At the first stage from 2020 to 2035, China will build on the foundation created by the moderately prosperous society with a further 15 years of hard work, to see that socialist modernization is basically realized; at the second stage from 2035 to the middle of the 21st century, China will, building on having basically achieved modernization, work hard for a further 15 years and develop China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful.

4. To embark on a journey to modernization and enter the middle and late stage of industrialization and urbanization

Modernization is a long historical process, and comes with the transformation of the society from a traditional one that is agricultural, rural and semi-closed, to one that is modern, industrial, urban and open. Through nearly seven decades of development since its founding, particularly the fast development over the past four decades since its reform and opening-up, China has ushered into the middle and late stage of both industrialization and modernization. Today, the foundation, drivers, conditions and strategic choices for China’s development are quite different from what they were before.

5. People’s demand for life will show profound changes

The people’s demand for life evolves with economic development, social changes, and improvements in living standards. Both at present and for a very long period of time into the future, the needs to be met for the people to live a better life are increasingly broad. Not only have their material and cultural needs grown; their demands for democracy, rule of law, fairness and justice, security, and a better environment are increasing. Fully and accurately identifying the people’s new demand for life is the foundation for correctly choosing the policy about the people’s livelihood.

6. The new vision of making development people-centered will guide overall development

Development is the underpinning and the key for solving all our country's problems. We must pursue with firmness of purpose the vision of innovative, coordinated, green, and open development that is for everyone. We must put the people's interests above all else, and see that the gains of reform and development benefit all our people in a fair way.

Socialism with Chinese characteristics enters a new era. That is a very important judgment, and requires us to ponder upon the new challenges and new trends in the future.

II. New Challenges Facing China in the New Era

In the new era, the principal conflict facing Chinese society has evolved. What we now face is the conflict between unbalanced and inadequate development and the people's ever-growing needs for a better life. This is a historic change that concerns the whole situation. It means we will face some new problems and challenges that are not only different from those seen in the three decades before China’s reform and opening-up, but also different from the situations in the three decades after the reform and opening-up.

In terms of the drivers of development, on one hand, on one hand, investment and export, which China has relied on for a long time for powering the rapid growth of economy, have shown an obviously weaker role in pulling economy. Instead, consumption is increasingly fundamental to economic growth, with the contribution rate close to 66.7%. But household debts grow fast as well, with the fast development of credit consumption. Whether China can build long-term growth on consumption is still controversial. On the other hand, the comparative advantages that have helped China become the “world’s factory”, known as the low cost and unlimited supply of labor, are fading away. Labor cost continues to rise despite the upward trend in economic growth; labor is structurally in short supply, and the quality of labor needs improving.

In terms of the resources for development, China has long relied on changes in land purposes to achieve capital accumulation. That advanced large-scale urbanization and infrastructure construction, and made real estate a pillar source of government finance at various levels. In China, it’s also common that development comes at the expense of the ecological environment. Constraints on both aspects are being fully tightened. So, China introduces the toughest ever environmental protection policy; it also sends a strong signal of its firm resolve to curb bubbles in real estate. That is, it would rather see slower economic growth than allow surges in house prices or continued deterioration of the ecological environment. The economic growth that we want must be quality growth in the future.

In terms of the development path, the policy, which China has adopted since its reform and opening-up to let some people and some areas get rich first, is important as it changed the “big-pot” system and promoted gradient growth. Now that the imbalance has now emerged, the development gap, the income gap and the wealth gap between urban and rural areas, between regions, and among members of the society have become too large. That is not only inconsistent with the essential requirements of socialism with Chinese characteristics, but also has negative influence on the growth of middle-income groups, development of mass consumption, and sustainability of economic growth. Worldwide experience shows that it’s more difficult to solve the problem than to achieve development. We shall not only make long-term efforts, but also avoid domination of public opinion by welfare populism. We need to build a dynamic, harmonious and orderly society characterized by fairness and justice.

In terms of the social burdens on development, the period in which the total social dependency ratio (the sum of children’s dependency ratio and old-age dependency ratio) has been on the decline since China’s reform and opening-up. In 2011 it saw the total social dependency ratio cross the inflection point and continued to rise rapidly. As the population structure continues to change and the average life expectancy lengthens, the pace of aging in China is much higher than what we forecast before, and the degree of aging is far higher than that in some developed countries at the same stage of development. That is, China becomes an aging society before it achieves moderate prosperity. How much the unusual aging in both size and speed will influence China’s future development is hard to evaluate accurately, due to complex factors. In the new era, China will face many more new problems and challenges, and all of them need careful analysis and precise evaluation.

III. New Trends of China’s Development in the New Era

First, China will avoid the middle income trap. According to the criteria released by the World Bank, the per capita GDP in a high-income country is US$12,616 or above. Based on the current level of development and annual average growth speed, China is expected to cross the middle income trap and become a high-income country before 2025, but in which year that will happen depends on actual economic growth, population growth and the yuan’s exchange rate against the US dollar. China is a big country with a population of more than 1.3 billion. It will be a significant historic event if it crosses the middle income trap, because only a few countries have made it since World War II. The more population a country has, the harder the crossing is. It took Japan 12 years to increase the per capita GDP from a level close to US$3,000 in 1972 to more than US$10,000 in 1984. It took South Korea eight years to grow the per capita GDP from US$3,000 in 1987 to US$11,469 in 1995. It may take 15 years for China to improve the per capita GDP from US$3,000 in 2008 to US$12,000. But high income doesn’t mean high quality of life. A considerable part of high-income countries are not developed countries. So, even after crossing the threshold for high-income countries, China will still be at the primary stage of socialism and remain the biggest developing country in the world.

Second, innovation and industrial restructuring will show their effects step by step. Guided by the new outlook on development, China will beef up input in education and technologies, and implement technological introduction and independent innovation to accelerate the upgrading of the industrial structure. Innovation and industrial restructuring is a hard and long process. But after decades of hard work, China has gradually changed its image as a major manufacturer of cheap and imitative products, with the quality and technological content of the products it exports steadily improving. So, innovation and industrial restructuring will show their effects little by little.

Third, China will grow into a major country of services and consumption. Over the past two decades, China has been known as the “world’s factory”. But it presently sees profound changes in the industrial structure, with the added values of the service sector exceeding 50% of GDP in 2015 and expected to be 60% in 2025, and the proportion of service workers representing 42.4% of the total. That will have two aspects of consequence in the next decade. First, white-collar workers will outnumber blue-collar workers and knowledge and technology intensive workers will become a huge group; second, the size of the middle-income group will increase to nearly 500 million, making China a huge consumer market in the world.

Fourth, village revitalization and “anti-urbanization” will become a trend. In China, urbanization has undergone two stages, with the first characterized by the large-scale concentration of population in big cities, and the second by the sprawl of cities into suburbs. In the future, it will see a new tide of rural revitalization and “anti-urbanization”. New forms of consumption, such as rural tourism, rural vocation, rural sightseeing, rural aged care, and rural lodging will develop fast, and the reform in the rural property rights system will go deeper. The profound changes in the ways of working will make some “non-working” middle-income groups in cities choose to live in the countryside, and the countryside will revive. thanks to entrepreneurship and the arrival of young people.

Fifth, the new demographic dividend is taking shape. While the old demographic dividend refers to the unlimited supply and low cost of labor, the new demographic dividend means the improvement in labor quality. As most Chinese farmers begin work after graduating from junior middle school, there is much room for the improvement of labor quality. With the extension of the duration of compulsory education from nine years to 12 years, the upgrading of occupational education and the fast rise of the gross college enrollment rate from the current level of 40%, a large number of craftsmen, technicians, and engineers will arise, and the new demographic dividend will constantly push up labor productivity in China.

Sixth, social security will be unified nationwide. The shift of social security from nationwide coverage to nationwide unification will be a historic one. It will go beyond the interest boundaries among regions and organizations, help people see doctors, receive aged care, get employed, and live more easily in other places, and thus promote flows of people and stimulate social vitality.

Seventh, relative poverty will be addressed after extreme poverty is eliminated. China will get all the population living below the extreme poverty line out of poverty by 2020, and this will be a great achievement attracting worldwide attention. But that doesn’t mean the disappearance of poverty. Relative poverty is a long-standing phenomenon. China will embark on a new journey to reducing and eliminating relative poverty as defined, based on the new standards.

(By Vice President of CASS and President of Shanghai Academy)