Wu Guangqiang

    GUANGDONG has had a higher GDP than any other Chinese province for many years. However, it will move away from the single-minded pursuit of higher GDP. What does this mean?

    While delivering his 15,000-word work report at the 11th Plenary Session of the 10th Guangdong Provincial Committee of the CPC, Wang Yang, Guangdong Party chief, made no mention of the term GDP, one of the hottest words in Chinese official documents and media. Instead, much of the focus was on economic restructuring and industrial upgrades. This seems to be the first time a provincial government in China has shifted its goal from stressing speed and quantity of economic growth to efficiency and quality.

    Wang also made clear his opposition to the notion of the “Guangdong Model.” Wang pointed out that as a “trail-blazer” in the reform and opening-up drive, Guangdong has been conducting proactive probes and experiments, but the process is yet to be completed, nor will it. Therefore, no mature model has come into being.

    Though Wang did not mention it, Guangdong’s GDP in 2011 was phenomenal: 5.3 trillion yuan (US$0.84 trillion), still ranking first in China. If seen as an independent economy, Guangdong would be the world’s 16th-largest economy in 2012, just below South Korea.

    Why, then, did Wang downplay the importance of GDP? In my view, his low-key address is not just a modest gesture, but a reflection of his insight into the grave challenges hidden behind the glorious figures.

    The biggest concern about Guangdong’s future is the risk of the middle income trap, meaning a situation in which an economy of middle income (US$4,000-10,000 per capita) fails to transition to high income (US$10,000 and above), due to lack of innovation and value creation needed to support high wages.

    We have seen some alarming signs. Labor shortages and an aging population are threatening the province’s development, particularly in the prosperous Pearl River Delta and coastal areas, while industrial upgrading is too slow. Labor-intensive sectors have come to the brink of being weeded out, but few promising industries have emerged to take their place. It is no exaggeration to say that the most vibrant export powerhouse may come to a standstill unless something urgent is done.

    Guangdong has been engaged in a “double transfer” strategy, namely, transferring labor force and conventional industries from developed areas to less developed areas. It’s said that this move has been initially successful. Given the fact that Guangdong is lacking talent in science, technology and culture, the task of transforming the province into a more innovative and greener economy will be tough.

    Another challenge is how to smooth over public grievances and conflicts between different social groups. Last year, an increasing number of workers went on strike for higher pay and better working conditions. The grass roots rose up against corrupt officials and for their lawful rights.

    The more common social unrest indicates the urgency of addressing the inequity that has come along with rapid economic growth. It’s laudable that Guangdong’s leadership has adopted a more liberal approach to such issues. It’s also appreciable that Guangdong is giving more leeway to the growth of civil-society organizations, which can help buffer against social unrest.

    But more attention should be given to the role of law and governmental liability. Nothing is more important than a fair and efficient legal environment. As often seen in TV coverage, a small tenant of a store gets evicted by the overbearing landlord before the lease is due.

    If Guangdong can make some progress in provision of a better legal environment for business and the populace, a new economic boom will be possible.

(The author is an English tutor and a freelance writer. He can be reached at jw368@163.com.)