Chang Jian  Huang Aijiao*

 

Abstract: The new normal state of economy is not only the overall trend of China's current economic development stage, but also the strategic choice of China for the future economic development, the anticipation for the economic development and its outcome under the new strategy. It is ofgreat strategic significance for the long-term development of China's human rights as a whole, yet it makes a short-term challenge to the realization of the rights of vulnerable groups. Under the new normal state of economy, it should be targeted to strengthen the protection of the rights of vulnerable groups, which is very important not only for the overall development of China's human rights causes, but also for China to cross over “the middle-income trap” and to achieve sustainable development of economy.

 

Key words: the new normal state of economy; guarantee of human rights; the middle-income trap; rights of vulnerable groups

 

The central government of China moderately adjusts the expectation of future economic growth to solve “the growing pains” of China’s economy. In 2014, the central government proposed a significant strategic judgment that “the development of China’s economy has entered into the new normal state”. “The understanding, adaptation and leading of the new normal state are the overall logic of the development of China’s economy in the current and future stage.”¹ As for human rights protection, “the new normal state of economy” also constitutes a short-term challenge to the realization of the realistic rights of vulnerable groupswhile contributing to the long-term sustainable development of China’s human rights cause. Therefore, the synergetic development of human rights protection and national economy under the new normal state of economy is an issue worth thoroughly pondering.

 

 

Since the reform and opening-up, China’s economy goes through rapid development with per capita GDP growing year by year. By 2014, China’s per capita GDP totaled US $7,485, and has joined the list of “countries of above average income” according to the classification standard of the World Bank. China isnow undergoing a step-over from the class of “upper-middle income” to the class of “high income”, and facing the statistical challenge of “the middle-income trap” in the meanwhile.

 

The concept of “the middle-income trap (MIT)” was proposed by the World Bank in 2007. It refers that “when a developing country attains the level of middle income, facing the challenge from developed countries with stronger innovation ability and low income countries with lower labor costs in the international competition, its disadvantaged position will lead to the slowdown of economic growth, the long-term engagement in the level of middle income and the unachievable step-over to the high income level.”²

 

China 2030: Building a Modern, Harmonious and Creative High-Income Society issuedjointly by the World Bank and the Development Research Center of the State Council of the People’s Republic of China in 2012 shows that among the 101 countries which stepped into the list of middle-income economies in 1960, only 13 countries became high-income economies by 2008. The rest 88 countries or regions either remained at the middle-income level or declined to the low-income level. That is to say, most of the countries were caught in “the middle-income trap”. Once it happens, a series of social chaoswill occur, such as difficulty of employment, shortage of public service, polarization between the rich and the poor, frequent occurrence of corruption and social turbulence. A serious threat to the guarantee of citizen’s human rights will result from the continuous declination of economic growth.

 

From 2010, China’s GDP growth began to slow down. The pressure of the economic downturn increased, and social conflicts and contradictions frequently happened. China was facing the challenge of “the middle-income trap”. In the face of this challenge, President Xi proposed the concept of “the new normal state” for the first time on his visit to Henan in May, 2014. President Xi said that “China still remains in an important period of strategic opportunities. We need to enhance our confidence to adapt to the new normal state and maintain strategic equanimity based on the phased characteristics of China’s current economic development.”³

 

On November 9, 2014, President Xi further expounded the concept of the “new normal state of economy” and summarized three characteristics of the new normal state at the 2014 APEC Economic Leaders’ Meeting. He pointed out that in the first three quarters of 2014, China’s GDP grew by 9.4% year-on-year, and main economic indicators were within a reasonable range. China’s economy showed the new normal state with the following main features. First was the transformation from high-speed growth to high-middle speed growth. Second was the unceasing optimization and upgrading of the economic structure. The tertiary industry and consumer demands gradually became the dominant role, and the urban-rural gap was narrowed. The proportion of the resident income increased. The benefits of development were shared by more people. Third was the transformation from factor-driven and investment-driven to innovation-driven. President Xi also said that, under the new normal state, though the growth rate of China’s economy slackened, the increment was actually considerable. Under the new normal state, China’s economic growth became more stable and the growth impetus more multiple.⁴

 

In December 2014, the central government held economic work conference, and specifically analyzed China’s trend change in respect of consumer demands, investment demands, exportation and balance of payments, production capacity and forms of industrial organization, relative advantages of production elements, characteristics of market competition, environment and resource restriction, economic risk and solution, resource allocation modes and macro-control style. The conference pointed out that “China’s economy is evolving into the stage with superior form, more complex division and more reasonable structure. The economic development has entered into the new normal state, transforming from high-speed growth to high-middle speed growth. The economic development mode is transforming from extensive growth based on scale and speed to intensive growth based on quality and efficiency. The economic structure is undergoing depth adjustment from focusing on increment and capacity expansion to the coexistence of storage adjustment and optimization of increment. The impetus of economic development is changing from the traditional increasing point to the new one. The understanding, adaptation and leading of the new normal state are the overall logic of the development of China’s economy in the current and future stage.”⁵

 

From the above, “the new normal state of economy” actually possesses three layers of meaning. First, it is the overall trend of China’s current economic development stage which is made by the Chinese government and leaders. Second, it is also the strategic choice of China’s future economic development mode, indicating that China will transform the economic development mode according to the phased characteristics of the economic development, adapt actively to the characteristics and requirements of the economic development of the new stage and strive to cross over “the middle-income trap” through new development strategy. Third, it is the expectation and affirmation of the economic developmental state together with its outcome resulted from new development strategy. Middle-speed development is defined as the normal state of the economic development in the next stage. The concept of “the new normal state of economy” is of great strategic significance for the sustainable development of China’s economy.

 

 

The new normal state of economy, as the new trend and strategy of China’s economic development, has dual influence on the development of China’s human rights cause. In the long-term, it plays a positive role in promoting the sustainable development of the human rights as a whole. In the short-term, however, it may exert some passive influence on the realization of the rights of vulnerable groups.

 

 

The goal of the new normal state of economy, as a new development strategy, is to guarantee the sustainable development of China’s economy. If this goal can be achieved, it will generate long-term positive influence on the sound development of China’s human rights cause, and will especially establish economic foundation for the sustainable guarantee of the right to life, the right to development, the environmental right and the cultural right. 

 

Firstly, the strategic implementation of the new normal state of economy will contribute to the sustainable guarantee of the right to life. The right to life is the right to ensure people’s access to basic living conditions. In order to guarantee citizens’ right to life, the State has the obligation to provide basic living standard and social security as well as medical and sanitary condition. The effective implementation of these securities relies on the sustainable development of China’s economy. If the economy cannot sustainably develop, or even steps backward, the level of basic living standard and social securities of citizens will decrease, and the medical and sanitary condition thus cannot improve with the times. Hence, if the sustainable development of China’s economy can be achieved through implementing the new normal state of economy strategy, it will serve as actual economic foundation for the guarantee of citizens’ right to life.

 

Secondly, the strategic implementation of the new normal state of economy will be conducive to the sustainable realization of the right to development. The right to development refers the right that every citizen has to participate in, promote and enjoy the economic, social, cultural and political development. To guarantee the right to development, the State has the obligation to provide better development opportunities to citizens, including employment opportunity and education opportunity, and to guarantee the equitable distribution of fruits of economic development among citizens. The implementation of the new strategy requires optimizing the economic structure, changing the developmental impetus and transforming the development modes and distribution modes. On the one hand, it will promote the sustainable development of the economy and continuously provide more employment opportunities for citizens. On the other hand, the implementation of the new strategy entails developing continual education and offering lifelong learning opportunities and conditions for citizens in order to adapt to the requirement of the transformation of economic development. It, therefore, promotes the guarantee of the right to education in effect. Moreover, the new normal state of economy demands “the transformation from mainly achieving national wealth to mainly achieving individual wealth, the transformation from monopoly industries to common prosperity of each industry, and the transformation from sudden wealth of the minority to common wealth of the vast majority. That is to say, it requires increasing the share of resident income in the distribution of the overall income in order to make the income distribution more fair and reasonable and let the masses of ordinary people share the outcome of the reform and development.”⁶ It will make the distribution of wealth more fair and reasonable, and guarantee the share of the outcome of the reform and development among citizens.

 

Thirdly, the strategic implementation of the new normal state of economy will contribute to the sustainable guarantee of the environmental right. The environmental right means that every citizen has the right to live in clean and comfortable environment which is suitable for living and good for health, and to rationally utilize environmental resources. It requires the State to guarantee that each citizen enjoys opulent sunshine, clean air, safe drinking water and sustainable environmental resources. Since the reform and opening-up, the extensive development mode of China’s economy leads to the over-consumption of various resources and severe environmental pollution. “In 2012, the energy consumption per unit of China’s GDP is 2.5 times the world average and 3.3 times the America’s, while the resource output per unit is only about one tenth of the America’s.”⁷ This development mode is not only unsustainable but constitutes severe threat to the guarantee of citizens’ environmental right. The implementation of the new strategy, including the adjustment of industry structure and emission structure, the transformation of economic growth pattern and the development of green and low-carbon industry, will gradually reduce the emission of waste water, gas and residue as well as carbon dioxide and promote the transformation from traditional growth pattern at the expense of consuming resources and energy and sacrificing the environment to the intensive growth pattern. The living environment will thus be continuously improved and the citizens’ environmental right will be guaranteed.

 

Fourthly, the strategic implementation of the new normal state of economy helps to promote the protection of intellectual property. The new normal state of economy requires the transformation from investment-driven to innovation-driven while the latter requests stronger protection of the property right over innovation. Therefore, the implementation of the new strategy will promote the establishment of stricter protection system of intellectual property, which provides more practical guarantee for profits deserved by citizens in technological and cultural innovation.

 

 

Though the implementation of the new strategy generates long-term positive influence on the realization of the right to life, the right to development and the environmental right, it constitutes some short-term challenges to the realization of the rights of certain social groups in the meanwhile. In the keynote speech at the 2014 APEC CEO Summit, President Xi pointed out that we were soberly aware of the new contradictions and problems brought by the new normal state and some emerging potential risks as well.⁸

 

Firstly, the slackened economic growth rate and the transformation of the development mode will exert certain short-term negative impact on the guarantee of the employment right. According to the statistics, from 2006 to 2009, 480,000 new jobs will be created as GDP increases 1%. Hence, the slowdown of the economic growth rate will directly influence the increase of new jobs. Diagram 1 shows that in recent years, though GDP kept growing, the growth rate decreased year by year. Corresponding to the decrease of the growth rate, the rate of the increased jobs declined year by year though the number of increased jobs kept rising (see Diagram 2). 

 

 

Through the comparison between the economic growth rate and the rate of the increased jobs, it can be seen that the decline rate of the increased jobs is faster than that of the economic growth rate (see Diagram 3). This might be the additional effect resulted from the technical innovation of enterprises since the application of high technology will squeeze the labor force and replace labor force production with machinery production, which eventually leads to the unemployment of employees.

 

 

 

Secondly, the slowdown of the economic growth rate will also exert certain influence on the realization level of social security rights. On the one hand, the slowdown of GDP growth rate will restrict the fiscal investment in social security. It can be seen from Diagram 4 that, from 2010 to 2014, the absolute value of the fiscal investment of the State in social security kept rising while the growth rate declined year by year. Apparently, the growth rate of the investment in social security slackens as the GDP growth rate slows down.

 

 

On the other hand, under the new normal state of economy, the economic downturn and the adjustment of economic structure lead to the unemployment, even poverty, of middle-low income groups. Correspondingly, the number of people requiring assistance from the State and society goes up. As in Diagram 5, in recent 10 years, the absolute number of the registered unemployed population in cities and towns showed an increasing trend. If the growth rate of fiscal expenditure of the State and society declines, it will be insufficient to meet the requirement of the newly-increased social assistance.

 

 

Thirdly, from the perspective of the influenced parties, the influences of the slowdown of economic growth and the transformation of economic development mode on different social groups are various. For the groups with higher education, such elements may be less evident as better job skills and more economic and social resources, the negative influence of the slowdown of economic growth and the transformation of economic development mode. It will sometimes provide them with better job opportunities. However, for the vulnerable groups with lower education, relatively simple job skills and insufficient economic and social resources, the realization of their rights will face severer challenge. The adjustment of economic structure may lead to the redundancy and bankruptcy of traditional enterprises while the first to be fired are those poorly-educated people. Technological change and innovation replace men with machines, while the first to be replaced are also those employees with lower education and poor skills. “Statistics show that in February, 2015, the cumulative increase of the domestic industrial added value was 6.8%, completed investment in fixed assets 13.9% and investment in real estate 10.4%. The above economic indicators which were conducive to employment were the lowest level since ‘the Eleventh Five-year Plan’.”⁹ According to the statistical data of the Ministry of Human Resources and Social Security, from 2011 to 2014, the annual increment of employment figure remained basically stable, which was around 2-3 million. The increment of the increased employment figure also remained relatively stable, which was around 11.68-13.22 million. However, the increment of peasant-workers decreased year by year from 2010 (see Diagram 6). It reflects from one side the influence of the new normal state of economy on the employment of the vulnerable group of peasant-workers.

 

 

 

In face of the short-term challenge brought by the new normal state of economy to the guarantee of human rights, especially the realization of the rights of vulnerable groups, the State shall take proper policy measures to strengthen the guarantee of the rights of vulnerable groups. Under the background of the new normal state of economy, the enhancement of the guarantee of the rights of vulnerable groups not only possesses great significance for the overall development of China’s human rights cause, but plays a positive role in crossing over “the middle-income trap” and achieving the sustainable development of China’s economy.

 

A. Influence of strengthening the guarantee of the rights of vulnerable groups on the development of human rights
 

For the short-term challenge brought by the new normal state of economy to the realization of the rights of vulnerable groups, President Xi pointed out that the adaptation of the new normal state depends on the momentum of comprehensively deepening reform. To comprehensively deepen reform, we need to enhance the welfare of people and promote social equity and justice. All reforms, in the final analysis, are for people and aim to let people enjoy better life. China implements more proactive employment and entrepreneurship policy to promote the continuous improvement of people’s income. In the meanwhile, China is establishing a fairer and sustainable social security system, improving the public service system and innovating the system of social management.¹⁰ The following policy measures should be targeted to strengthen the guarantee of the rights of vulnerable groups:

 

First, job opportunities shall be created to help the reemployment of laid-off workers. For the laid-off workers under the new normal state of economy, the State should provide them with reemployment opportunities within their ability, and offer them vocational education and training which can be accepted in order to enable them to find suitable jobs as soon as possible.

 

Second, the establishment of social security system shall be perfected to let the low-income groups enjoy basic living necessities. The low-income groups tend to fall into extreme poverty when they encounter unemployment, disease, disability, industrial injury and disasters. Hence, social security system for the low-income groups in cities and towns should be strengthened and perfected, and the subsistence allowances should be adjusted according to the inflation rate. It is necessary to establish the emergency relief system and to expand the coverage of various social insurances so that the low-income groups can enjoy their social securitiesin need. Meanwhile, for the groups whose income decreases due to the governance of environment, green subsidy system should be established and improved.

 

Third, educational discrimination and imbalance shall be eliminated to let the vulnerable groups fully enjoy the right to education. Under the new normal state of economy, the level of education plays an even more important role in the realization of other rights. Therefore, the State should specifically strengthen the compulsory education, vocational education and continuing education of vulnerable groups like peasants and peasant-workers to enable them to master modern technological skills and the ability to employment and control finance. It is necessary for the educational investment to tilt toward vulnerable groups, which will provide more educational opportunities and conditions. Educational discrimination against migrant workers and their children should be eliminated.

 

Fourth, the income gap shall be properly reduced to guarantee the equitable distribution of economic achievements by vulnerable groups. The gap between the rich and the poor widens as the economic growth rate slackens. China’s Gini coefficient remains high which is much higher than the danger level of 0.4 for a long time. The Gini coefficient was 0.473 in 2004, and it gradually rose to the high spot of 0.491 by 2008. After that, it declined year by year to 0.469 by 2014.¹¹ Therefore, proper measures, especially reducing the unreasonably high income and raising the income level of low-income groups, should be taken to reduce the income gap.

 

Under the new normal state of economy, strengthening the guarantee of the rights of vulnerable groups has great significance on the overall development of China’s human rights cause. The short-term negative effects brought by the new normal state of economy make the realization of the rights of vulnerable groups the shortcoming of the overall realization of China’s human rights. In this sense, the improvement of the conditions for realizing the rights of vulnerable groups as well as the supporting measures for strengthening the rights of vulnerable groups will contribute more to the overall development of China’s human rights cause.

 

 

Under the new normal state of economy, strengthening the guarantee of the rights of vulnerable groups possesses great significance not only on the overall development of China’s human rights cause but also on the sustainable development of economy.

 

From the experiences and lessons of dealing with “the middle-income trap” of other countries, during the period from middle-income stage to high-income stage, those who succeeded in crossing over “the middle-income trap” all paid attention to the guarantee of the rights of vulnerable groups. Most of those who eventually fell in “the middle-income trap”, however, ignored the guarantee of the rights of vulnerable groups.

 

 

Korea, Japan, Singapore and Taiwan are Asian countries and regions that have successfully crossed over “the middle-income trap”. One important experience of their success is the emphasis on the guarantee of the rights of vulnerable groups.

 

Firstly, these countries and regions paid attention to the guarantee of the citizen’s right to education, which greatly improved the educational level of workers. Japan attached importance to higher education and secondary vocational education while Korea laid emphasis on special training of advanced skills, cultivation of human resources and equalization of educational services. The investment of Korea in education in 1984 accounted for 13.3% of GDP. Singapore highly valued educational training while Taiwan of China paid attention to engineering education and vocational training. “The State’s educational level is a major determinant of the quality of the labor force, and therefore is the critical influence factor of the economic growth. Insufficient educational investment occupies an important part in the collapse of ‘the middle-income trap’ of middle-income countries.”¹² “From the comparison between Korea’s successful experience of crossing over ‘the middle-income trap’ and the lessons of Brazil and Malaysia, it can be seen that the key to avoid the middle-income trap is economic transformation and industrial upgrading, while the development of fair education is the way, impetus and constraint to achieve the accumulation of human capital and knowledge as well as the technological progress. In the meanwhile, the improvement of social quality and democratic concept resulted from educational progress serve as the ultimate driving force for the institutional transformation and social turn. It is also helpful for narrowing the gap of wealth and reducing social conflicts.”¹³

 

Secondly, these countries and regions paid attention to the protection of farmers’ rights while crossing over “the middle-income trap”. Japan adopted the protecting and supporting policies for agriculture, and carried out a series of land reforms to create conditions for farmers’ prosperity. From 1970 to 1980, Korea carried out Saemaeul movement which greatly improved the rural environment.

 

Thirdly, these countries and regions adopted the measure of equalized income which kept the Gini coefficient at a low level. From 1962 to 1990, Japan’s Gini coefficient remained at a basic level of 0.35 while the national income rose 19-fold. Korea’s Gini coefficient declined to 0.32 in 1995 from 0.35 in 1976 while the GDP per capita increased by 10 times.¹⁴ The equalized income expanded the middle class. Before stepping over the threshold of high-income countries, the middle class of Japan and Korea occupied above 70% of their total population.¹⁵

 

 

Most Western European countries also succeeded in crossing over “the middle-income trap”, while the emphasis on the guarantee of the rights of vulnerable groups served as an important factor. Their practice was that: when the economy was in a long period of fluctuation, they implemented the social security policy of welfare state, established welfare state and practiced “social market economy”. With the goal of equalized income, they developed and implemented social insurance, social welfare subvention and progressive taxation policy, paying special attention to the establishment of various social insurances such as social medical insurance, endowment insurance and occupational insurance. Meanwhile, various policy measures were adopted to promote maximum employment. These policies applied by Western European countries to guarantee the rights of vulnerable groups improved people’s livelihood, alleviated the poverty and unemployment brought by the industrial revolution and laissez-faire capitalism, eased the dissatisfaction and revolt of the workmen and promoted social stability as well as the economic growth. These countries successfully crossed over “the middle-income trap” through the above measures. Though the subsequent excessive welfare policy trapped these countries in the welfare state crisis, the contribution of these policies in the successful step-over of “the middle-income trap” should not be ignored.

 

 

Most Latin American countries once struggled in “the middle-income trap” for a long time. A profound lesson of these countries is that the insufficient guarantee of the rights of vulnerable groups made a small number of high-income group enjoy exclusively the economic achievements rather than the common share among all people which leads to the wide gap between the rich and the poor.

 

Take Mexico for instance. From the 1940s to the mid-1960s, Mexico kept a long-term rapid economic growth at 6.7%, and created which was called “the Mexican Miracle” at that time. However, a series of social turbulence since 1968 made its economic growth rate slackened greatly. Mexico over the hill was caught in “the middle-income trap” and could not achieve the normal economic growth for a long time. The main lesson learned from Mexico is that “the imbalanced income distribution made the high-income class which accounted for a small percentage of the population the main beneficiaries of ‘the Mexican Miracle’ and obtain huge wealth while the low-income groups which occupied a big percentage of the population obtained barely no economic interest from ‘the Mexican Miracle’ and continued to live at the low-level living condition.”¹⁶

 

It can be seen from the successful experiences of countries crossing over “the middle-income trap” as well as the lessons of countries caught in “the middle-income trap” that, under the new normal state of economy, strengthening the guarantee of the rights of vulnerable groups has positive functions on the overall development of human rights cause and the sustainable development of national economy. In the meanwhile, the question that needs to be thought further is that: how to strengthen the guarantee of the rights of vulnerable groups to help cross over “the middle-income trap” and avoid “the welfare state crisis”.

 

·Chang Jian, Vice President of Zhou Enlai School of Government, Vice Director of Center for the Study of Human Rights and Ph.D. Director at Nankai University. Huang Aijiao, Postdoctoral Researcher of Zhou Enlai School of Government at Nankai University.

 

1. The Interpretation of Nine Tendency Changes of the New Normal State at the Central Economic Working Conference. Cited from Xinhua.com,.12/11/c127297098.htm. Access date: July 2, 2015.

 

2. Guo Jinxing and Hu Ying, Comparative Study on Crossing the Middle-Income Trap of Latin American, Southeast Asian and East Asian Economies. Academia Bimestrie, Vol.2, 2015.

 

3. See Speech of General Secretary Xi Jinping on His Visit to Henan in May, 2014. Cited from Junrong, Tian. Wu, Qiuyu. New Normal State, Where is the New? Cited from people.com.cn.

 

4. See Xi Jinping. Seeking Sustainable Development and Building Asia-Pacific Dream—Keynote Speech at the 2014 APEC CEO Summit. Cited from Huang Hailei and Pan Shanju. Systematic Interpretation of New Normal State and First Reference of Asia-Pacific Dream at APEC Speech of Xi Jinping. Cited from Tencent New.

 

5. The Interpretation of Nine Tendency Changes of the New Normal State at the Central Economic Working Conference. Cited from Xinhua.com.

 

6. Li Zuojun. Lead the New Normal State of Economy to Head Toward Better New Normal State. Journal of Chinese Academy of Governance. Vol.1, 2015.

 

7. Li Zuojun. Twelve Difficulties to Solve for Leading the New Normal State of Economy. Theory Guide, Vol.1, 2015.

 

8. See Note 4.

 

9. National Bureau of Statistics.

 

10. See Note 4.

 

11. National Bureau of Statistics. China’s Gini Coefficient of 2014 is 0.469. January 20, 2015. See Chinese Radio Network.

 

12. Huang Meibo and. Zhu Dandan, China’s Economic Transformation and Step-over of “the Middle-income Trap”. Fujian Tribune (The Humanities and Social Sciences, Bimonthly). Vol.4, 2015.

 

13. Song Yu and. Tan Renchao, Educational Imbalance and the Middle-income Trap: Theoretical Mechanism and International Comparison. Fujian Tribune (The Humanities and Social Sciences, Bimonthly). Vol.5, 2015.

 

14. Qin Liping and. Zhen Mingxia, International Experiences of Crossing Over “the Middle-income Trap” and the Enlightenment to China. Scientific Development. Vol.12, 2014.

 

15. See above.

 

16. Zhang Zhanbin and Zhou Yuehui, Analysis and Reflection on Several Problems concerning China’s New Normal State of Economy, Reform of Economic System, Vol.1, 2015.