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China Briefings

Reports on China issued by Samsung Economic Research Institute

China's National People's Congress 2011

China's National People's Congress 2011

KWON Hyuk-Jae

June 1, 2011

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The 4th meeting of the 11th National People's Congress (NPC), held on March 5th through to 12th, approved the 12th Five-Year Program (12-5 Program). The 12-5 program is focused on shifting the paradigm of the Chinese economy from quantitative expansion to qualitative development. Despite high growth, the income gap among regions, income brackets, cities and rural areas has aggravated social conflict, raising calls for improvements in income distribution and economic structure.

When compared to the 11th Five-Year program, the most striking feature of the 12-5 program is that it highlights China's shift from an export/investment-centered economic structure towards a domestic demand-focused one. The 12-5 program manifested a strong drive towards achieving qualitative development projects such as a shift in economic structure, improvements in income distribution, strengthening industrial competitiveness and eco-friendly economic development.

The government has suggested a detailed blueprint of the overall economic policy for 2011 to realize the 12-5 program and various policies to resolve the continuing inflationary pressure. Also, the government doubled its efforts to boost domestic consumption and improve citizens' lives while continuing to pursue policies for industrial restructuring, higher competitiveness and balanced growth. The success of the 12-5 program is dependent upon whether China can overcome challenges both at home and abroad in the coming five years.

Korea seriously needs to see China as a global market rather than a production base with low wages, and set up new strategies. Korean industries and companies should set up their own countermeasures based on changes in the business environment in China, such as wage increases. With China's restructuring and sophistication, competition between Korea and China is expected to further intensify. Against this backdrop, Korea should seek new methods of economic cooperation with China for mutual benefit.

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