Welcome to China's new growth path

The Nation, Asia News Network, Bangkok

The leadership's change in emphasis from a high-growth to a sustainable economy bodes well for the region too.

As the economy in which the 1997 Asian crisis first took off, it cannot but be heartening for Thailand to see that the People's Republic of China, Asia's rising economic superpower, is becoming cautious about its high-growth strategy. But can China's leaders address this and still manage the expectations of its people?

Reports that Beijing is rethinking its go-for-growth strategy and could instead adopt a more sustainable model is greatly welcome. It is in the interest of the rest of Asia to see China grow with stability. It is also a lesson from the bubble era of the 1990s that high growth is not sustainable, which holds true for China, where the burden of this high-growth policy has fallen on state banks and the environment in particular.

The Financial Times reported that the new Chinese growth strategy should determine that growth must be "comprehensive, coordinated and sustainable". Prime Minister Wen Jiabao was quoted as saying that development needed to be better harmonized between the towns and villages, different regions, the economy and society, and man and the environment.

Future pursuits by the Chinese government are likely to intensify in the areas of social welfare, social justice and corporate responsibilities, as well as the environment and other barometers associated with economic sustainability.

Yet the strategy shift is more easily stated than done. The government is fearful of any social chaos that may arise from economic austerity measures. The people's expectations have been raised by years of high growth, especially in the coastal areas. Every area of China's runaway economic success is faced equally by a threat.

Nevertheless the process of unwinding has to begin somewhere. Thailand should be supportive of any new initiative by Beijing in this direction. After all, Thailand was the clear victim of its own success in the mid 1990s. In some ways it has learned the lesson and in some ways not. Human greed is not constant or eternally fallible.

For a typical nation, such as Thailand, it is best for such low-growth strategy to be implemented via market mechanisms such as interest rates, selected regulations which give importance to quality over quantity, and signals from national and business leaders that shift the expectation of the firms, workers and consumers. Adam Smith's "invisible hands" work both ways.

But in a state-run economy such as China things are in some ways easier to do. The government may not have the political need to be populist, but the market mechanisms to deal with people's expectations as naturally as possible are far from being in place. The Chinese people may be more willing to side with their leaders, but who can say when it comes to self-interest, money and wealth?

The thousands of years of China's history have been full of instances of conceit, bad judgment and abuse of social justice by leaders. But the Chinese leaders of this era are worldly, visionary, intelligent and cautious in their approach. They look at the long-term rather than short-term benefits, without which they would not have seen that China needs a sustainable economic policy. It should be adopted sooner rather than later, and if political or psychological courage is called for, now is the time.