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UPDATED: March 3, 2014 NO. 10 MARCH 6, 2014
Drawing up a New Blueprint
Local governments plan to tackle pollution and change growth modes for 2014
By Li Li

During a visit to central China's Hunan Province in November 2013, Chinese President Xi Jinping said that the practice of using GDP growth as the major gauge of local officials' performance should be abandoned. "Transforming the economic growth mode is a historic task in front of us. To fulfill this task, economic growth must maintain a proper speed, otherwise the relationships between resources, capital and market will be strained, dooming the transformation to failure," Xi commented.

Xi's call has been reflected in the more prudent economic forecasts of provincial-level governments.

Chen Xikang, a senior research fellow with the Center for Forecasting Science under the Chinese Academy of Sciences (CAS), told Shanghai Securities News that it was common for a local government to set an economic growth goal between 12 and 13 percent, or even 15 percent, in the past. He said that to maintain such high-speed growth, many policies were devoted to increasing investment, which hindered the task of transforming the growth model.

According to Chen, many localities failed to meet their preset growth targets in 2013, which forced them to be more realistic.

Wang Shouyang, another forecasting expert with the CAS, said that the lack of optimism could be linked to the sluggish growth in local industrial revenue and taxation.

Despite this, many local governments have increased their investment in programs to improve local residents' living standards while promising to reduce spending on official hospitality, overseas trips for official purposes and purchases of official vehicles.

In southwest China's Sichuan, the provincial government budgeted a total of 16.6 billion yuan ($2.73 billion) for educational appropriation this year, up by 11 percent year on year.

The Tianjin Municipal Government announced it would increase the per-capita subsidy to participants of the government-run medical insurance scheme from 420 yuan ($69) to 520 yuan ($86) this year. As a result, participants will pay a smaller proportion of their hospitalization bills and their insurance cap for hospitalization expenses will be raised.

In the southernmost island province of Hainan, Governor Jiang Dingzhi vowed to implement 10 programs to improve local people's living standards in 2014, including launching development-oriented poverty-reduction projects in 60 impoverished villages and beginning the construction of 35,000 government-subsidized apartments for the urban poor.

Beijing initiated a new program at the beginning of this year under which the government shares in the ownership of apartments with individual citizens, in an effort to help middle-income families afford buying houses. For example, if a person has 1 million yuan ($165,000) or 2 million yuan ($330,000) in savings, but the house price is 3 million yuan ($495,000), the difference can be made up for through shared property.

Xinjiang Uygur Autonomous Regions has promised to complete the construction of government-subsidized housing for 300,000 rural families and government-subsidized settlements for 30,000 herding families in 2014.

Speeding up reform

According to People's Daily reports, in the government work reports of all 31 provincial-level regions, "reform" is mentioned 1,438 times, averaging out at 46 times per report.

Last November, a decision on comprehensively deepening reforms was adopted at the Third Plenary Session of the 18th Central Committee of the Communist Party of China. The central leading group for overall reform, which has sub-groups covering reforms in six areas—economic structure and ecological progress, democracy and rule of law, cultural system, social system, system of Party building, and the discipline inspection system—convened for its first meeting on January 22. Speaking at the meeting, President Xi called for adequate understanding of the difficulty, complexity and urgency of reforms, as more and more interest groups will be affected as reforms go further.

By February 21, at least 28 provincial-level governments had officially formed corresponding leading groups for overall reform with similar sub-groups.

In Zhejiang, the provincial government has been focusing its efforts on reducing administrative examination and approval procedures since the second half of 2013. Throughout 2013, it reduced the number of administrative licensing procedures by nearly 40 percent and slashed other examination and approval procedures by 83 percent. The provincial government report promised to further reforms in this area for the rest of 2014.

In its work report, the Hebei Provincial Government promised to improve the market environment for the private sector by tearing down investment barriers that they face and by facilitating investment in infrastructure construction, basic industries and utilities. "Their investment will be welcome in any sector where there are no regulations against private investment," the report stated.

Tianjin's reform measures include encouraging private enterprises to participate in the restructuring of state-owned enterprises, giving private enterprises financial and tax incentives, and reforming the enterprise registration system. Similar steps have also been taken in other regions across China.

Email us at: lili@bjreview.com

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