China to Tackle GapBetween Rich, Poor

Next 'Five-Year Blueprint' Will Boost Social Services, Address Growing Inequities

By KATHY CHEN Staff Reporter of THE WALL STREET JOURNALSeptember 30, 2005; Page A9

BEIJING -- China's Communist Party leaders are set to meet soon to approve a national economic-policy blueprint for the next five years aimed at smoothing uneven development that has fueled unrest around the country.

Members of the party's powerful Central Committee will convene in Beijing from Oct. 8 to Oct. 11, the official Xinhua news agency said. Besides giving the green light to China's next five-year plan covering 2006 to 2010, the meeting may result in some personnel changes that reflect President and party chief Hu Jintao's continued push to consolidate power, according to people familiar with the situation.

Traditionally, China's five-year plans, modeled after the former Soviet Union's, have set specific goals for everything from economic growth to steel production to livestock numbers.

Details of the coming plan haven't been publicly announced. But for the first time, it is being dubbed a "five-year blueprint" instead of a "five-year plan" to reflect the government's step-back approach to managing the economy under a market system. Economists say a main focus of the plan will be to address the growing inequities between China's prosperous coastal regions and its poorer inland and rural regions, where the majority of China's 1.3 billion people live. The plan is expected to shift the emphasis from strong economic-growth rates to the strengthening of social services, like education and health care.

Whether Mr. Hu's government can meet these goals in coming years could be critical for the country to maintain the overall stability that has for the past decade helped it attract record levels of foreign investment, exceeding an estimated $66 billion this year. China's growth rate is expected to surpass 9% this year.

For years, many economists and Chinese officials saw the key to stability simply as maintaining a high-enough growth rate to generate jobs and opportunities; some Chinese could get rich first and others could catch up later. But the increasing numbers of large-scale, violent protests around the country over the past year or two have sparked concern at the top levels of government that more must be done to address the growing wealth gap and surging discontent over such issues as corruption, environmental degradation and soaring educational and health-care costs.

"China has just undergone another cycle of fast economic development," said Fan Jianping, a vice director of the State Information Center, a Beijing-based think tank. "If we do a lot of wrong things amid such fast development, the contradictions will just get bigger."

Economists said a main theme of the five-year blueprint will be a "scientific approach to development" -- focusing on improving people's livelihoods, not just growth; seeking efficient and sustainable development, not blind growth; and ensuring that the benefits of growth are divided among the people, such as through higher taxation of wealthier areas.

After approval by party leaders, the 11th five-year blueprint would require passage by the National People's Congress, China's largely rubber-stamp legislature, during its annual meeting in March.

High-level personnel changes also are in the works, as Mr. Hu continues to consolidate power after taking over from former party head Jiang Zemin three years ago, people familiar with the situation said. It remained unclear, however, whether these changes would be implemented this year or next, when the Communist Party is scheduled to convene a major meeting where personnel changes traditionally would be announced.

One official who could possibly be replaced is Shanghai's Communist Party chief, Chen Liangyu, an ally of Mr. Jiang who is thought to have angered Mr. Hu and Premier Wen Jiabao for failing to toe the line on the central government's effort to cool the sizzling property market, said people familiar with the situation. A district government officer in Shanghai said recent internal meetings in the district government suggested that Mr. Chen would leave in the near term. An official in the general duty office of the Shanghai City government said Thursday, "I have no idea about this matter." The city's party committee news office couldn't be reached Thursday evening.

Candidates who could succeed Mr. Chen are said to include Liu Yandong, a woman who heads the United Front Work Department, the party's arm in charge of coordinating with China's other political parties, ethnic minorities and Taiwan, which Beijing views as part of China; and Zhang Gaoli, the progressive party chief of the northeastern province of Shandong.

The blueprint is expected to promote the development of regional economies around urban centers. Ma Kai, head of the National Development and Reform Commission, which is overseeing the drafting of the plan, told local media in mid-September that such regions could include the Yangtze River Delta, the Beijing-Tianjin-Hebei area, the northeastern industrial belt and Chengdu-Chongqing cities in the southwest.

Chen Dongqi, deputy director of the commission's macroeconomy division, has estimated that China's economy would grow 8% to 8.5% most years between 2006 and 2010, but that some quarters might see a lower rate, even around 7%. He said the 2008 Olympics to be held in Beijing would fuel investment and consumption, revving national growth in the years leading up to the event, but warned that Beijing should prepare fiscal policies to prevent the economy from sliding afterward.

Some officials and economists have criticized the "scientific approach to development" as lacking implementation details, noting that the concept was introduced in 2003 but hasn't yielded much progress so far.