April 9, 2013 · 6:45 pm
China’s GDP growth will increase this year to 8.2% from 2012’s 7.8%, the Asian Development Bank says in its latest annual Development Outlook (full text of China chapter). But growth will moderate to 8% next year as the government has to deal with pressures on the environment and to narrow income gaps.
“They will face a difficult task in managing risks and keeping the economy on an even keel,” the Bank says, “while shepherding through the complex reforms needed to deliver more inclusive growth.”
The new leadership will have to walk a fine line between keeping the nascent recovery going with old-school fixed asset investment supported by large-scale public projects and private consumption enabled by rising wages and pensions. The challenge will be to get right the timing of tempering that with planned fiscal and financial reforms needed for rebalancing, and more stringent environmental targets for business needed for social stability. The cost of both will cause growth to level off next year.
Policymakers also need to ensure minimum wages do not outpace productivity growth. The country’s declining labor competitiveness, exacerbated by a strong exchange rate, is already seeing low-cost and labor-intensive manufacturing jobs move off shore. The World Economic Forum’s most recent ranking of global competitiveness saw China’s ranking slip for the first time in 7 years (down three places to 29th). One implication of this is that narrowing the income gap would best be tackled by social transfers to poorer households rather than through higher wages.
December 5, 2011 · 11:34 pm
In a typical year, up to 200 million people are affected by natural disasters in China and 40 million hectares of crops are damaged. The average annual economic impact from disasters, be they earthquakes, typhoons and floods or droughts, is 100 billion yuan ($14.5 billion).
No natural disaster, by officials’ own admittance, has been more challenging to China than the 5-12 Sichuan earthquake of 2008, if nothing else than by dint of its sheer magnitude. The area affected was about the size of South Korea, the number of victims requiring resettlement more than the population of Spain and the overall number of people affected more than the population of Canada. Similarly unprecedented was the scale of response required.
The National Development and Reform Commission (NDRC) asked the Asian Development Bank to see what best-practice recovery essons could be learned from such other large scale natural disasters such as the Kobe earthquake of 1995, the Aceh earthquakes and tsunami of 2004 and 2005 and Hurricane Katrina in the U.S. in 2005.
The ADB has just published its findings. It gives China good marks for its quick response to the disaster, noting that the capacity of policymakers to react quickly to natural disasters is important, as speed of response is a key for restoring market confidence and contributing to a feeling that pressures faced may be temporary. But it also questions decisions such as the one to relocate the county seat of Beichuan, 70% destroyed by the earthquake, to a new city 35 kilometers away. The report says that damaged cities are almost always rebuilt on the same site rather than relocated to safer territory, and that the relocation of a city after an earthquake is “not a simple concept”.
It also notes that the disaster literature abounds with examples of decision- and policy-makers at all levels of government failing to implement essential public safety measures, and then avoiding accountability when failure inevitably occurs. It says:
The PRC appears to be no different: as recently as August 2006, in a keynote speech to mayors at a China Mayors’ Association forum on urban development, Vice-Premier Zeng Peiyan warned that many municipal governments are weak in urban management and disaster prevention, and exhorted mayors to abandon “blind expansion of cities” and to focus on increasing disaster preparedness and prevention. The apparent failure to adhere to building codes for public buildings such as schools supports the Vice-Premier’s statement.
The ADB derives scores of specify lessons from the disasters that it has studied that could be applied to the recovery from the Sichuan cake. All should be required reading for any official and civic leader in any part of China where natural disasters threaten, i.e. pretty much everywhere.
They can be summarized:
- Inter-governmental coordination is vital: Each level of government has specific responsibilities in every aspect of disaster management (hazard mitigation, disaster preparedness, disaster response, disaster recovery). Overall effectiveness, however, can be measured by the degree to which these various components are integrated:
- Timing is important: Recovery actions initiated too early or too late can have significant downstream implications. Hasty decisions on what and where to relocate typically fall in this category. Similarly, some decisions that are delayed, such as victim compensation measures or new building codes may interfere with smooth recovery procedures.
- Recovery implies physical, economic and social integration: The desire for rapid physical structural results must be balanced against the need for equitable and sustainable long-term economic and social solutions. Aspects such as livelihood assistance and social integration programs need to be dealt with concurrent with the quality reconstruction of damaged structures.
- Process and participation is as important as the physical: Disaster recovery is all about re-building communities. Who decides and how decisions are arrived at with respect to physical recovery is of utmost importance.
- Focus on content as well as construction: Too often the onus is placed on the rapid physical reconstruction of structures, such as school, hospitals and critical service infrastructure, without decisions being made to re-visit content, such whether the school curriculum or teacher training was adequate to meet the wider needs of society, or if underground cabling is better for ‘all-hazards’ risk reduction than overhead wiring, for example, in seismic areas also prone to high wind/severe storms.
- Incorporate disaster risk reduction components: Disasters do strike twice! Rebuilding after a disaster is an opportunity to get things right the second time around and to “build back better!”