Lin Zhonggeng: "The Twelfth Five-Year Plan" Must Change the Mode of Development

“We believe that the key to the 'Twelfth Five-Year Plan' is the transformation of China’s development model.” Lin Zhonggeng, in an interview with reporters, made clear his suggestions for China’s future development model.
From the main participants of the Moganshan Conference in 1982 (the "Soviet Forum on Economic System Reform in the Soviet Union and Eastern Europe") to the organizer of the "Bashan Round Conference" in 1985 (ie the "International Symposium on Macroeconomic Management"), As a Filipino Chinese, Lin Genggeng deeply participated in the blueprint design of China's market economic system as early as in 1979. The word "macro-control", which has now been widely used, was created by Lin Cenggeng and Wu Jinglian on the Bashan Round.
In 1985, Lin Zhonggeng established the World Bank office in China and served as the first chief representative. Since then, Lin advised and participated in the establishment of China's first international investment bank, China International Capital Corporation, and served as the first CEO of the then State Council of China.
In 2010, Lin Genggeng and Prof. Michael Spencer (Nobel Laureates) co-chaired the research project of the Beijing Kane Klaus Economic Research Foundation: "From an International Perspective, China's Twelfth Five-Year Plan ". After retiring from the World Bank, Lin Chonggeng established and led the "China Economic Research and Consulting Project" consisting of China and world famous economists.
Lin Zhonggeng told reporters that many international experiences have shown that the development of low-income countries to high-income countries must undergo a process of transforming the development model. Even if China, a rapidly developing big country, adapts to the new situation and environment in this process, it is still crucial.
"With the changes of the times, it is impossible for China to continue to use the previous development model."
Lin Zhonggeng said that the export-oriented economy that China has long relied on in recent years has exposed this trend. As the status of China’s overall economic strength has become more and more important in the world, other countries are no longer willing to see that Chinese goods occupy a large part of their home markets, and trade protectionism incidents against China will inevitably increase. Therefore, the Chinese economy will not be in the future. It may follow exports as its main driving force.
For the other two carriages that drive the Chinese economy, Lin Zhonggeng believes that China's annual investment is large, but investment efficiency is extremely low. China’s investment accounts for more than 40% of the total economy, which means that society has not benefited from these investments. At the same time, social consumption has not grown, and the percentage of the national economy is still falling. It can be seen that the public does not actually enjoy growth.
Lin Zhonggeng stressed that another shortcoming of China's existing economic development model is that there is a huge income gap. China is one of the countries with the largest income gap between urban and rural areas in the world, and this gap continues to widen and there is no decline.
The huge gap in economic and social development between regions in China is also a drawback of China's existing development model. Lin Zhonggeng believes that if we want to change this situation, the construction of a pension and affordable housing system will be a very important issue in the next five years.
Associated with this, Lin Zhonggeng believes that the main task is to deepen reforms. In his view, “The reform of the fiscal system is a big problem. It also involves the taxation system. The key lies in the relationship between the central government and the local government. At the same time, local governments have limited resources, but they have great responsibilities.” Lin summed it up as “central hospitality and local payment.” He pointed out that local governments are not financially capable and have no incentive to implement them. They are more worried about GDP growth. For example, in the construction of a harmonious society, the establishment of basic education and the basic medical system is very important, but the responsibility for implementation is in the local government. They do not have the ability to complete, which makes the poor areas of medical facilities and education far less than wealthy areas. This runs counter to the goal of the central government. Lin Zhonggeng stressed that the current state of the financial system is one of the major obstacles to the transformation of the development mode.
At the same time, “The state-owned enterprises are profitable but they are not turned over to the state treasury. This is the problem. The profits of state-owned enterprises in any country in the world must be included in the national fiscal revenue.” Lin Zhonggeng suggested that, first of all, the scope and functions of state-owned enterprises should be reviewed. Second, state-owned enterprises must be included in the state budget and make a comparison between this part of the money and the country’s limited budget for basic education and health assurance. This will fundamentally solve the worries of the people.
He stressed that the government does not have enough measures in public finances to take up its due social responsibilities. Therefore, the key to the 12th Five-Year Plan is to implement it. We must fundamentally change the role and function of the government in order to promote the realization of the goal.

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