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Blueprint and timetable for future

By Chi Fulin | China Daily | Updated: 2013-02-28 07:37

Speeding up urbanization and expanding domestic demand invite strategic plan to push forward institutional reforms

Whether China can smoothly advance its efforts to build a well-off society in an all-round way within the next decade hinges on whether the country can realize the opportunities produced by releasing its enormous domestic demand, effectively tap the huge potential of accelerating urbanization, and, more crucially, achieve reform breakthroughs in some key fields.

Domestic demand, if fully released, is expected to bolster economic growth of 7 to 8 percent in the coming years. As the focus has shifted from feeding and clothing people to larger and higher-level development, China's consumption demand has continuously expanded and its consumption structure has experienced profound changes.

The country is now transforming from resources-dominated consumption to services-dominated consumption. It is estimated that the volume of China's urban and rural nominal consumption will top 50 trillion yuan ($8 trillion) by 2020, which, together with related investment activities, will result in nearly 100 trillion yuan of domestic demand. Such colossal domestic demand, if effectively released, will not only fuel China's economic growth over the next decade, it also offers an important driving force for the transformation of the country's economic development model.

Urbanization will serve as the largest force releasing China's potential domestic demand. To advance urbanization, as mapped out by the Party's new leaders, the country will pursue higher quality urbanization rather than just the expansion and creation of cities. This means greater efforts are needed to promote integrated urbanization, instead of segregating the city and countryside. Higher quality urbanization will help the country better release its enormous domestic demand potential and lay a solid foundation for the establishment of the nation's long-anticipated new development model.

Whether such a goal can be obtained will be decided, to a large extent, by whether the country can forcibly push forward sweeping reforms in a range of areas. China's success largely lies in the huge dividends originating from its continuous institutional reforms and improvements over the past decades. The achievement of a similar success in accelerating urbanization and expanding domestic demand in the years ahead will depend on the country's efforts to push forward institutional reforms, ranging from reforms aimed at realizing a dynamic balance between investment and consumption and a more reasonable distribution of State capital to income distribution that can help increase the middle-income population.

For example, to promote higher quality urbanization, so as to effectively tap its potential, the country should take substantial steps toward reforming its entrenched household registration system and the current land system and step up efforts to integrate migrant workers as urban residents. Without such breakthroughs, there is little chance of China maintaining sustainable development in the years ahead.

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