Economic and Structural Reform

Programme description

Title: Economic and Structural Reform Programme
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: China
Lead executing agency: National Development and Reform Commission (NDRC), Research Office of the State Council (SRO), China Institute for Reform and Development (CIRD), Ministry of Commerce (MofCom), Office of the Leading Group for Finance and Economics (OLGFE)
Overall term: 2008 to 2014

Context

Despite rapid economic growth, China continues to face serious economic, social and environmental challenges. Regardless of being the fourth-largest economy, China still shows signs of being a developing country. Over 135 million people live below the poverty line of one US dollar per day. Central China, the northeast, and above all the twelve western provinces, are developing slowly. They have lower growth rates than the other regions of the country and are losing their competitive potential and hence their access to world markets. China's accession to the WTO in 2001 has done little to change this. The disparities, however, are increasing, not just between regions, but also between city and countryside and between migrant workers and the registered urban population.

Objective

The Chinese government’s reform policy is based on the principles of a socially and ecologically oriented sustainable market economy and is increasingly based on scientific fundamentals and international experience.

Approach

The economic and structural reform programme consists of five components:

  • Macroeconomic policies and structural reform
  • Economic and social policy decision-making guidelines for the State Council leadership
  • Research in economic, administrative and social reform
  • Development of distribution systems in rural areas
  • Sustainable regional development

The programme provides Chinese partners with professional advisory services to develop and implement strategies for economic, social and structural reforms. Expert hearings, workshops, conferences and trade missions will stimulate important economic policy dialogue with other countries and international organisations and thus establish a platform for exchange. This vibrant network will also enable the production of short-term concepts and studies, which will serve the Chinese partners as guidelines for decision-making.

Results achieved so far

With access to the leading economic decision-makers in the Party and State Council, the programme has initiated the process of change in the PRC at the highest level. Exemplary here was the interaction of almost all programme partners – the Research Office of the State Council (SRO), the Office of the Leading Group for Finance and Economics (OLGFE), the National Development and Reform Commission (NDRC) and the Research Institutes (CIRD and CDRF) – with the German Council of Economic Experts, selected economic research institutions and the German Federal Ministry of Economics. Thus, with the support of German economic experts – and taking into account the operational principles of the BMZ for the social and ecological market economy – concrete proposals to tackle the current financial and economic crisis were formulated. These proposals assisted the Chinese State Council in the preparation of its 400 billion Euro stimulus package.

In the run-up to the twelfth Five-Year Plan that began in 2011, concepts were developed in cooperation with the German Federal Ministry of Economics and Technology which were directed at resource-saving, energy-efficient, low-carbon growth, which, in turn, would induce strengthened domestic demand. Core parts of these concepts were taken into consideration in drawing up the new five-year plan.

Through exchanges with experts from an industrial area in Germany, the Ruhrgebiet, plans for the diversification of commercial systems were created regarding the process of economic, social and environmental transformations of coal regions whose stocks are depleted or are already exhausted. These plans were the basis for future investment programmes and led to a decision by the State Council to further develop the strategy for developing old industrial areas.