Cheng Siwei - Former Vice Chairman, Standing Committee, NPC, China HARDtalk


Cheng Siwei - Former Vice Chairman, Standing Committee, NPC, China

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years of unpaid overtime. Those are the headlines. It is time for

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HARDtalk. 2012 is the Chinese Year of the Dragon and Chinese workers

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certainly seem to have fire in their belly - there's growing

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discontent amongst the workforce whose labour fuelled the country's

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economic miracle. They're angry that export-led growth has largely

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passed them by whilst filling state coffers and enriching some beyond

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their wildest dreams. My guest is Cheng Siwei, one of China's most

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influential economists. How much of a threat is economic uncertainty

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and social unrest to China's prosperity and stability? Cheng

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Siwei, welcome to HARDtalk. There is a Chinese saying that a rising

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tide does not lift all boats. That is what has gone on in China. You

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have had a fantastic growth rates for many years, but the benefits

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have been very uneven. Yes. But what is your question? What do you

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think of that? The benefits have been very uneven and that is not

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sustainable, is it? On the one hand, yes. The gap between the rich

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people and the poor people is growing. On the other hand, we are

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taking measures to narrow this gap. That is a very short answer. What

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are the authorities doing? Let's build a bit of a picture. Let's

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start with the 150 million migrant workers who have left rule areas in

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China to work in the cities. They suffer terrible discrimination and

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they are getting increasingly restless, what can you do about

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that? Why is this situation allowed to exist? Actually, I think the

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situation is improving. The migrant workers' conditions have been

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improving after the labour contract. Certainly, they do not get the same

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salary as people in urban areas, but their income is growing. Do you

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accept that they have been exploited? When some migrant

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workers work for $70 a week, working 70 hours a week, that is

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exploitation, can you accept that? Actually, according to labour law,

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they only work eight hours a day. Five days a week. If they work over

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time, there should be over pay. can tell you, on BBC Radio if we

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have carried a report about migrant workers, one told us he was paid $1

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an hour and he worked 70 hours a week. He was not the only one.

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not talking about individual cases. I would like to tell you this is

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sometimes a bias towards migrant workers within China. On average,

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the migrant worker's income increased 5-8 % last year. That is

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according to statistics. At the heart of the problem for the

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migrant workers, is the system you have had in China since 1958. It is

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called the Fuku system. It means when migrant workers leave their

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villages to work in the cities, they find they have no access to

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healthcare, housing, education for their children. They are treated

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like second-class citizens. They find they cannot live properly in

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the cities. Tell us why the system continues? I would like to tell you

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this year we are constructing the renting house for those migrant

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workers. We have started construction for a 10 million

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houses. To improve housing for migrant workers. Their children can

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be accepted in schools. In middle schools. Yes, I acknowledge the

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situation is not so good. But we are improving, that is what I want

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to tell you. You are improving, but the system continues in China.

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There is a new book coming out this year, core Chinese whispers, about

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Chinese migrant workers, when I walk into the Chinese workers slums

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and neighbourhoods, five minutes from the financial centre and

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shopping malls, many ask me, we live mac under the same sky, why

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are we not entitled to the same rights? They are segregated from

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the urban dwellers, tens of thousands of migrant children are

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left without schools and nurseries. In China, two worlds exist in

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parallel. That is the kind of country that you live in. Actually,

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as I told you. Their income is increasing. Certainly they cannot

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compare with the rich people in the urban areas. One example, now you

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hire a house made in Beijing, one year ago it would have been --

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1,500 RMB. Now, the income of the migrant workers is increasing. You

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can look as sadistic -- statistics, certainly we need to improve living

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conditions. But it is not easy to move people... The urbanisation is

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parallel with industrialisation. Moving people to the urban area is

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a must, but it is not a simple question. We have to provide them

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jobs, we have to provide them incomes and provide education for

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their children and housing. That is what the government is doing.

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government has recognised there is a problem. You have improved wages,

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the minimum wage is being raised in several provinces in China. Are the

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authorities... In 22 provinces we have linked the minimum salary with

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inflation. That isn't about 32 provinces in China... Are the

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authorities in China panicking? We saw so many strikes all over China,

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factory workers making shoes, striking over pay and redundancies.

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Do the authorities acknowledge they have a big problem on their hands?

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The migrant workers are saying, we have had enough. Certainly. The

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strike is a warning for the government. Just like in the

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Western world. I do not think it is just in China. Actually, the strike

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reminds us will need to improve the conditions of the migrant workers.

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That is why we are taking the measures. It is not just the fact

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they are striking, of course they are in many parts of the world, it

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is the fact that this represents a huge challenge to the governing

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Communist Party in China, that is something that could have very

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severe consequences in your country. Well, that is why we are

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constructing a harmonious society. We will narrow the gap between the

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rich and the poor. We bought a lot of effort to improve the conditions

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of the poor people in the urban areas. You have talked about the

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gap between rich and poor, here you have this governing Communist Party

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in China, it was said many years ago, to get rich is glorious, you

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have one million multi-millionaire as in China. People buy Rolls Royce

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cars like never before in China. What do people say about this gap?

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He also said, after part of the people get richer, they should help

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the poor people. That is what they are doing now. If you are comparing

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with the present age of rich people, they are very small amount in China.

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But because we have a big population the number is quite big.

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They have the right to enjoy their better life. It is not just the

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migrant workers, is it? Who are unhappy and challenging the

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authorities. You have got the rural dwellers, we have seen protests by

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them, especially in areas Redland has been lost to property

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developers. Very little compensation. 3 million farmers

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every year in China lose their land to development. We have seen the

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story were they barricaded themselves against the police. That

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is something you have to take notice of? Yes. There are some

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cases. Generally speaking, people's incomes in the rural areas are

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increasing. Also, we are trying to help the people in the rural areas

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to improve their lives. There are some cases because of the corrupted

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officials... They do not behave according to the law. Actually,

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sometimes they... Individual cases cannot be proved of the whole

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situation. It is not just this village and because of corrupt

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officials, one professor, a land expert, said corrupt officials are

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to be blamed but the problem is more basic. Because land is

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collectively owned in China and farmers have no right to sell the

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patches of a lease. That is an additional problem. Actually, this

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is different. They have their own small space of land for their

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housing. Collective is for most of the land... That is the systematic

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arrangement. Now we have legislation for the ownership price

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of the land... If the village official wants to sell the land,

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they have to get the approval from the committee, from the conference

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I am trying to get an impression of what is happening. Each time, you

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say that the officials know what is happening and are doing something

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about it. So let me try again. In one of northern village, members of

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a middle class community went on protest. They were protesting

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against the fact that a chemical plant was being built without their

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knowledge. They were concerned about toxic city -- toxicity and

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the authorities that down and closed the plant down. But this is

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another challenge to the authorities by people power. That

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is the point I am trying to make - that authorities are being

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challenged on several fronts. How worrying is that to them, in your

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opinion? I think that this is normal because people want to

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exercise their rights and understand the situation. If there

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is an environmental problem, they must be aware of the consequences

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of that kind of construction. In this case, they protested and

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finally they won the case. That proves that we, the government,

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take people's opinions into consideration. OK. You have talked

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about... This has not only happened in that one area but in others as

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well, in the same kind of instance. You have talked about the fact that

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there has been battered urbanisation in China. What took

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many decades in other countries happen very quickly in China. Last

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year, 50% of the appellation were classified as the urban dwellers

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compared to in 1982 -- of the population. However, you have

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severe problems in China. Cities have bad infrastructure. There are

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problems with a migrant workers that we have already talked about.

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Chinese society is in many ways currently under threat. Well cover

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every society in every country is under threat in one way or another.

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But I do not think that China is the most at threat or that this is

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the most frightful China. As I have said, we are taking measures to

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improve the situation. Also, this situation has already improved.

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have made that point but I want to give you one clear example looking

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at the type of society you have made in China. Last year, there was

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the case of a top bloke in Guandong province, who was knocked over by a

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van 18 -- and 18 passes by walked past and nobody helped her. What

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was your reaction when you heard about this case? What does it tell

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you about Chinese society today? Yes, my reaction was that we have

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got to pay more attention to this social problem. But as I have said,

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China is a country with 1.4 billion people. If you compare China with

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your country, there is a great deal of difference. If you take one

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special case in your country, it would be amplified tenfold in China.

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But if you compare with China or India, you can see this may be the

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same situation. So I do not think you can take this... I can think of

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much more individual cases thank you will know. But just to finish

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briefly on this particular point. The Communist Party official from

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Guandong province said that the fact that a small child was allowed

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to bleed to death on the pavement meant that we should look into the

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ugliness within ourselves with a dagger of consciousness and bite

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the soul searching for that. Has this length to China saying that we

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have got to find values in our modern society - whether it is

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derived from Confucianism or whatever? Has its lead it to that

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kind of soul searching? Yes because the Guandong province recently had

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a problem in the land. Now they have a deputy secretary of the

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profits leading the way in solving this problem. That means we have

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got to pay my attention to this kind of problem from the very

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beginning. -- pay more attention. Not to develop and ferment it

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further. Let us look to the economic future of China. Chinese

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growth has been very export oriented. But because of rising

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labour costs in China and also reduced demand for your products

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because of the global downturn, this is causing problems. Growth

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will still be more than 80% in 2012 compared to 9% last year. -- 8%.

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How concerned are you about the basis of your economic miracle?

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China's economic slowdown. There is no doubt about that. In 2011, we

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expanded 9.2%. This yet, maybe 8.5%. The reason is mainly come from the

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Western world because the foreign demand will be reduced because of

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excess of liquidity. The petroleum prices are still high and low

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interest rates in the Western world will cause inflation for developed

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countries and developing countries. Finally, these countries are

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leveraging. They will withdraw their investment from China and

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others, other developing countries. These external regions -- these are

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the external reasons for the economic slowdown. Internally, we

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still have the problem of the oversupply of money, inflation, and

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also we have got to change our development pattern from export and

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investment Orient and to relying more on domestic consumption. That

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is what we are doing this year. right, finally, 2012 is the year of

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the dragon. For the Chinese, that is supposed to be a good omen. His

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2012 going to be the year when we see dramatically reduced growth and

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increasing instability in the country? Or is this going to be a

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good ear for China? -- could it here. I will say that 2012 will be

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a difficult year for our country because the economy is slowing down

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and because inflation is staying high. But what we are doing is, by

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working hard to change our development pattern by relying more

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