China do the plan cp ddi 2011 1 table of contents


Space and military budget trades off with social programs and economic stimulus



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Space and military budget trades off with social programs and economic stimulus

Harsh V Pant, professor at King's College London in the Department of Defence Studies, 3/11/10. “China slows its defense spending, on paper” http://news.rediff.com/column/2010/mar/11/china-slows-its-defence-spending-on-paper.htm



After nearly two decades of double digit increases in its military budget, China last week announced a mere 7.5 percent jump in defence budget this year. This was the first time since the 1980s that China's defence spending increased in single-digit percentage. The Chinese government maintained that while this increase will be used to enhance China's ability to meet various threats, the nation remains "committed to peaceful development and a military posture that is defensive in nature." At the domestic political level, it was important for the Chinese Communist Party to control its expenditure patterns in light of the toll that the global financial crisis has taken on the Chinese economy, especially the crucial export sector. China's massive economic stimulus programme and the attempt by the government to devote more resources to the social sector in light of growing socio-economic tensions may have forced the CCP to divest the defence sector of some of its resources. The CCP leadership is extremely sensitive to the charge that it is not adequately addressing domestic socio-economic issues and in light of rising unemployment, increasing military expenditure substantially would not have gone down well with the ordinary Chinese. It is not without significance that this year's session of the National People's Congress is expected to see a shift in spending priorities toward affordable housing, education, health care and other social programs
Focus on inflation and social spending only—Chinese state of the nation proves

Associated Press, 3/5/11. “China budget increases social spending” published via CBC News, http://www.cbc.ca/news/world/story/2011/03/05/china-budget.html

China's government promised Saturday to clamp down on inflation and urgently raise incomes as it pushes to spread the benefits of economic growth at a time when living standards are rising but so are popular calls for greater change. In a more than two-hour speech that is China's equivalent to a state-of-the-nation address, Premier Wen Jiabao vowed to boost assistance to working class, rural Chinese and pensioners, build more affordable housing, exempt lower-income citizens from taxes and raise spending on education and health insurance. Along with increased social spending, Wen said pulling down inflation and closing the wide rich-poor gap were top priorities. He directly linked their urgent resolution to the need to keep people happy and stave off unrest while the government slows the breakneck growth of recent years to a more sustainable level. "We must make improving the people's lives a pivot linking reform, development and stability ... and make sure people are content with their lives and jobs, society is tranquil and orderly and the country enjoys long-term peace and stability," Wen told the 2,923 delegates gathered in the Great Hall of the People for the opening of the national legislature's annual session.

No Spending Now


China cutting R&D spending now—must focus on inflation

Benjamin Lim and Don Durfee, staff writers, 7/7/11. “Exclusive: China may cut spending on strategic industries” in Reuters, http://www.reuters.com/article/2011/07/07/us-china-industries-idUSTRE7660XO20110707



China may rein in plans to invest heavily in seven new strategic industries, including high speed rail and wind power, scaling back cutting-edge projects for industries suffering from old-fashioned problems such as corruption and overcapacity, sources said. Beijing originally planned to invest up to $1.5 trillion over the next five years in the seven sectors, hoping they would grow into a pillar of economic growth and help shift the world's second-largest economy away from one centered on manufacturing cheap goods. The pullback on spending stems partly from worries about corruption in the country's high-speed rail project and overcapacity concerns in the wind power sector, said two sources with ties to China's Communist Party leadership and knowledge of the plan. "The government is now reconsidering the seven new strategic industries plan," one source told Reuters, requesting anonymity because he was not authorized to speak to reporters. "The (size of the) retrenchment is still under deliberation," the source added. Beijing has long used infrastructure spending to generate jobs and economic activity, most recently tapping government coffers to stave off the effects of the global financial crisis. While high rates of fixed asset investment have helped maintain strong growth, some economists, such as Nouriel Roubini, have argued that China's current levels of investment are unsustainable. These days, China is more concerned about taming inflation and managing a mountain of debt piled up by local and provincial governments that the country's state auditor estimates at 10.7 trillion yuan ($1.65 trillion). The strategic industries cover high-end equipment manufacturing, alternative energy, biotechnology, new generation information technology, alternative fuel cars and energy-saving and environmentally friendly technologies. Analysts welcomed the news, which could mean less borrowing by local governments and faster consolidation of sectors like wind power. "A lot of these projects are in already question because of their (debt) liability and safety standards," said Kevin Lai, an economist with Daiwa in Hong Kong. "The question that needs to be asked is: Is (investment-driven expansion) the kind of growth that China really wants?"


Only room for social spending—healthcare budget was unexpectedly upped a trillion yuan

Shan Juan, staff writer, 3/10/11. “China ramps up healthcare spending” in China Daily, http://www.chinadaily.com.cn/bizchina/2011-03/10/content_12151446.htm



With the nation's medical insurance systems now covering 1.27 billion people out of the country's 1.34 billion inhabitants, key officials vowed on Wednesday to iron out wrinkles encountered by those seeking medical help.

Under ongoing medical reforms that largely started in 2009, the government has established a basic medical insurance system for non-working urban residents and a new rural cooperative medical care system. The systems benefit 432 million urban dwellers and 835 million rural residents who were not covered by medical insurance in the past. And, as part of its drive to improve healthcare, the government now plans to spend 1.13 trillion yuan ($173 billion) on healthcare between 2009 and the end of this year. The amount surpasses the previous plan to spend 850 billion yuan on healthcare during that time frame, Wang Jun, vice-minister of finance, said at a press conference held on the sidelines of the annual parliamentary session. Sun Zhigang, director of the State Council Office of Medical Reform, said the extra spending will have a dramatic effect. "With these efforts, China will soon deliver universal healthcare to all citizens and I am confident that the reforms will include solutions to hardships encountered by people seeking medical care," Sun said.
China only increasing social spending now—non-consumption spending threatens uprising

CTV news, staff reporters for the main Canadian news outlet, 3/5/11. “China to tackle inflation, increase social spending” http://www.ctv.ca/CTVNews/TopStories/20110305/china-inflation-spending-110305/

The Chinese government made a promise for increased social spending on Saturday, as high inflation rates and the specter of public protest threatened to slow the Asian nation's booming economy. In a state of the nation address, Premier Wen Jiabao said the government would boost spending by 12.5 per cent by investing in education, job creation, low-income housing, health care and pensions. The promises appeared to be aimed as satiating the poorer members of the communist state as whispers spread of a potential peaceful uprising against the ruling class. In a two-hour speech to nearly 3,000 delegates gathered for the opening of the national legislature's annual session, Wen said plans to close the divisive rich-poor gap and improve living conditions were crucial to forestalling unrest. "We must make improving the people's lives a pivot linking reform, development and stability... and make sure people are content with their lives and jobs, society is tranquil and orderly and the country enjoys long-term peace and stability," Wen said on Saturday. A recent jump in consumer prices has caused serious strain on China's poorer citizens. The cost of everyday items rose nearly five per cent in January alone, while food spiked by more than 10 per cent. In his speech, Wen promised to try to keep inflation below four per cent this year and help those most hit by the cost increases. An ambitious five-year plan would see the economy transform to one driven more by consumption than by state investment bank loans, which would expand spending power. Wen said the government would take a gradual approach to the change, lest it interfere with recent success that has made China the world's second most influential economy. The plan for increased social spending comes amid the threat of social unrest, with recent anonymous online messages calling for peaceful weekly rallies similar to those that have toppled autocrats in Tunisia and Egypt. Beijing's state-run newspaper has warned people that protests would ruin China's prosperity and were being organized by foreigners hoping to lead the country into chaos.

Unrest Threatens CCP Survival


Social inequalities threaten CCP survival

Murray Scot Tanner, senior political scientist at the RAND Corporation, Summer 4. “China Rethinks Unrest” in Washington Quarterly, The Center for Strategic and International Studies and the Massachusetts Institute of Technology 27:3 pp. 137–156



http://www.twq.com/04summer/docs/04summer_tanner.pdf

Surprising numbers of analysts in the public security system display an undisguised sympathy for the very worker and peasant protestors the police are supposed to suppress. In their writings, they characterize laid-off demon- strators as “exploited,” “marginalized,” “socially disadvantaged,” “victims,” and “losers” in economic competition, driven to protest by social distrust and the “heartlessness” of the free market. They frankly concede that many protestors are victims of crooked managers who drove their factories into bankruptcy through illicit dealings or who absconded with company assets. One Shanghai analyst recently claimed that 55 percent of the protests there were attributable to illegal actions by enterprise managers.19 Many police experts hold a special contempt for China’s increasingly un- equal income distribution. They suggest, almost humorously, that, even after 25 years of market-oriented reform, China’s police force remains riddled with “Communist sympathizers .” Some invoke comparative development studies to claim that such widening inequality places China in a “zone of genuine danger” of instability. With undis- guised judgmentalism, one provincial police report argues that inequality exacerbates un- rest primarily because most citizens realize that many of China’s nouveaux riches at- tained their wealth through corrupt, illegal enterprises that made “explosive profits.” Beijing hopes that it can grow its way out of social unrest before it threatens the regime’s survival. As former premier Zhu stated in his March 2003 valedictory, “De- velopment is the fundamental principle, and the key to resolving all prob- lems China is facing. We must maintain a comparatively high growth rate in our national economy.” Zhu also argued that the pace of reform had to be bal- anced against the risks of unrest.20

Unrest Kills US-Sino Relations

Unrest leads to massive violence and kills US-Sino relations.

Murray Scot Tanner, senior political scientist at the RAND Corporation, Summer 4. “China Rethinks Unrest” in Washington Quarterly, The Center for Strategic and International Studies and the Massachusetts Institute of Technology 27:3 pp. 137–156



http://www.twq.com/04summer/docs/04summer_tanner.pdf

As China’s new leadership under General Secretary Hu Jintao struggles to find a more realistic and sophisticated strategy to manage unrest and strike an effective balance between reform and social control, these internal police debates will form a pivotal part of the counsel they receive. As these analyses underscore, the struggle to control unrest will force Beijing’s leaders to face riskier dilemmas than at any time since the 1989 Tiananmen Square demonstrations. Experiments with less violent police tactics, economic concessions to demonstrators, and more fundamental institutional reforms all risk further encouraging protest in an increasingly restive society. Nevertheless, these challenges must be navigated if the party wants to avoid the ultimate dilemma of once again resorting to 1989-style violence or reluctantly engaging in a more fundamental renegotiation of power relations between the state and society. The United States also needs to rethink social unrest in China and recognize its potential systemic impact on the Sino-U.S. bi- lateral relationship. Underlying Beijing’s emerging new diplomacy of self-confidence and international cooperation, quiet fears of instability are increasingly limiting and complicating the relationship by raising Beijing’s perception of the risks involved in a full range of strategic and economic is- sues. Inevitably, Beijing will face major social-control crises as it struggles to find a new and hopefully less repressive strategy to ensure social order. Mean- while, within the limits of our influence, the United States and its allies must now start crafting responses that will encourage Beijing to accelerate institutional reform rather than revert to the violence of 1989.



Social unrest kills US-Sino relations—economic ties

Murray Scot Tanner, senior political scientist at the RAND Corporation, Summer 4. “China Rethinks Unrest” in Washington Quarterly, The Center for Strategic and International Studies and the Massachusetts Institute of Technology 27:3 pp. 137–156



http://www.twq.com/04summer/docs/04summer_tanner.pdf

Because the implications of China’s grow- ing unrest cannot be limited to China, the United States and its allies would also ben- efit from rethinking the state of China’s so- cial unrest and particularly its widening influence on Sino-U.S. relations. For example, as a number of Western analysts have cor- rectly observed, in the past several years China has begun to engage in a new style of diplomacy marked by greater international activism, self-confidence, and engagement, especially with se- lected multilateral economic and security institutions.29 At the same time, China’s pervasive fear of unrest, like a systemic illness with few obvious symptoms, has quietly insinuated itself into almost every issue in China’s major bilateral and multilateral relationships and, in many ways, will set the limits on how far China can go in its new diplomacy. Unlike their colleagues in China’s internal security forces, Chinese diplomatic interlocutors have been loath to concede the growing latent impact of protest on Beijing’s for- eign relations, probably for fear of appearing to admit that their government’s legitimacy may be increasingly challenged. Yet, as unrest continues to raise the risks of major reforms and concessions, relations with China are likely to become much trickier and the recent era of good feelings between China and the United States is likely to become much more complicated. For example, the economic theory of unrest that currently dominates in Beijing, that social stability and regime survival hinge on the CCP’s ability to deliver economic growth and to save jobs, imposes a negotiating asymme- try in trade relations between China and the United States. That is to say, many economic issues that Washington might consider mere horse trading, Beijing sees as intimately related to social stability or even regime survival. Beijing’s concerns lend a deadly seriousness to its handling of such issues as liberalizing renminbi exchange rates or the pace of implementing World Trade Organization (WTO) agreements that could threaten to increase un- employment in China’s highly protected state-owned enterprises, particu- larly in the increasingly unstable northeast. Rather than risk further loss of social control by implementing systemic reforms, China can be expected to offer quick fixes and face-saving gestures, such as the recent promise to pur- chase large numbers of U.S. airplanes and other exports. Beginning in the late 1990s, even before WTO accession, China’s Public Security researchers began publishing hundreds of openly circulating forecasts of the industries and regions that would be hardest hit by WTO-related reforms in China as well as the likely consequences for internal security. From the standpoint of Western trade negotiators, the MPS’s conclusions will constitute a virtual playbook of WTO implementation issues on which China is most likely to drag its feet. Western commercial officials would benefit from detailed analy- ses of these MPS studies.
***NEG: AT CHINA SPENDING DA***

Tech Spending Now


China is looking to invest heavily in R&D now—huge tech budget

Asia Sentinel, web-based Asian regional publication focused on news, business, arts and culture, 2/1/11. “China’s heavyweight R&D spending” republished in the Asian Correspondent, http://asiancorrespondent.com/47488/chinas-heavyweight-rd-spending/

Although previously China has publicly indicated its ambition to invest heavily in research and development, the amount to actually be devoted to the sector is staggering, and is expected to be distributed by fiscal or government subsidy – actual cash payment. Sean Darby, Asia strategist for Nomura international (HK) Ltd., estimated the amount of spending over the next five years in a report this week at 5 trillion yuan (US$758.4 billion), an even bigger amount than the mammoth – and successful – 4 trillion yuan stimulus package announced by the central government in 2008 as an attempt to minimize the impact of the global financial crisis. Hugh Peyman, the managing director of Research-Works, the leading independent equities research firm based in China, told Asia Sentinel that “It will be larger than people think. We are 60 percent of the way through a 25-year program to get R&D up to 2 percent of GDP, yet 75 percent of the spending lies ahead in the last decade to 2020.”

NEG Econ Sustainable


China economy stable—strong regime will prevent collapse

Ying Ma, visiting fellow at the Hoover Institution on War, Revolution and Peace at Stanford University, February/March 7. “China's Stubborn Anti-Democracy,” Hoover Institution Policy Review, http://www.hoover.org/publications/policyreview/5513661.html



To promote democratization in China effectively, the United States must better understand the reasons for authoritarianism’s resilience. Various factors contribute to such resilience, including spectacular economic growth, regime institutionalization, suppression and cooptation of the political opposition, and stringent restriction of what democracy theorists called “coordination goods”. First and foremost, the Chinese regime’s ability to deliver continued economic growth has prolonged its ability to govern. Between 1978 and 2005, the World Bank reports, China’s gdp growth averaged 9.4 percent annually. For the past four successive years, China’s economy has grown approximately 10 percent each year.2 This growth has created jobs, raised living standards, delivered modernization and boosted national pride. According to the United Nations Development Program, 250 million Chinese citizens were lifted out of poverty between 1980 and 2005. Though some critics, notably Gordon Chang, have predicted that China’s economy will collapse before the end of this decade,3 economists such as Thomas Rawski and Barry Naughton and institutions such as the imf argue that China’s prospects for continued economic development appear bright.4 Ironically, impressive economic growth has bolstered the government’s legitimacy and reduced pressures for it to liberalize politically. As Bruce Bueno de Mesquita and George W. Downs argue, economic growth, at least in the short term, stabilizes and legitimizes authoritarian regimes more than it undermines them.5 For this reason, Chinese President Hu Jintao expects — and fervently hopes — that China’s gdp in 2020 will quadruple that in 2000.<6 Aside from achieving spectacular gdp growth, the regime has also increasingly institutionalized its bureaucracy. Instead of weakening, floundering or over-centralizing, observes Andrew Nathan, the ccp has smoothed out succession politics, promoted meritocracy over factionalism for the advancement of political elites, modernized a disparate and large bureaucracy, and established the means of political participation at the local and work-unit levels to strengthen legitimacy.7 According to Nathan, this means that leadership successions, such as the recent ones in 2002 and 2003, now occur in an orderly fashion and are no longer characterized by the violent factional struggles of the Maoist era. Senior government leaders arrive at top posts increasingly because of their educational background and technocratic competence rather than pure loyalty to specific ccp leaders. The party has decreased its interference in the work of government organs and bureaucracies, allowing them more leeway to oversee their functional responsibilities. All the while, the central government has also instituted mechanisms for — or created the appearances of — being receptive to citizen opinions at the very micro levels of society. The regime, in contrast to previous eras, has shown little internal disagreement over its overarching approach to governance. Institutionalized and unified, the regime is determined to tackle China’s major economic and social challenges, suppress any viable political opposition, and stay in power. Of course, regime institutionalization alone cannot quell political discontent, dissent, or opposition, but this is where the effective suppression and cooptation of rival political groups come in. Beijing has brutally suppressed the spiritual group Falun Gong, a Buddhist sect that surprised and alarmed the regime by massing outside of its walled leadership compound in Beijing in a 10,000-strong silent protest on April 25, 1999. Similarly, the ccp has effectively cracked down on the China Democracy Party, which democracy activists in 1998 attempted to organize as the first national opposition party under communist rule. Simultaneously, the ccp has keenly and successfully co-opted potential political competitors. According to Minxin Pei, the party has built coalitions with 1) intellectuals, who were at the forefront of criticizing the regime in the 1980s and in leading the Tiananmen Democracy Movement of 1989; 2) private entrepreneurs, who comprise the emerging middle class that many believed would demand more rights as they acquired fuller stomachs; and 3) technocratic reformers, who focus on the changes necessary to institutionalize and modernize China’s governance.8 By doling out everything from party membership to senior government positions to financial perks, the party has rendered moot the political threat from these three potent and potential opposition groups.9 The ccp’s suppression strategy is capped off with the restriction of what democracy scholars refer to as “coordination goods.” These goods include political rights, such as free speech and the right to organize and protest; general human rights, such as freedom from arbitrary arrest; and press freedom. Bueno de Mesquita and Downs contend that the availability of coordination goods affects democratization because they drastically influence the ability of political opponents to coordinate and mobilize but have little impact on the continued economic growth that is crucial for sustaining an authoritarian regime’s legitimacy.10 The Chinese government suppresses these goods by censoring the press and the Internet, cracking down on coalition-building and organization among dissident groups, diffusing and discouraging protests through a combination of cash payoffs and outright intimidation, and trampling on the human rights of its citizens. By suppressing these coordination goods, Beijing has in effect elevated and prolonged its survival prospects. In short, the Chinese regime has not sat haplessly by when confronted with challenges to its rule but has instead aggressively fought to maintain power. Its tactics may have differed with each political challenge, but the result — continuation of ccp rule — has remained the same

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