Despite the new-found wealth, prosperity has come at a price. One negative effect is serious environmental damage.
Chinese Academy of Sciences Professor Shi Mingjun said exploitation of natural resources, ecological degradation and environmental pollution, has outweighed China''s economic benefits in recent years
Under a research program, Shi said the cost of environmental damage was 2.75 trillion yuan (401.7 billion U.S. dollars) in 2005,while the growth in gross domestic product (GDP) for the same year was 2.24 trillion yuan.
"As the nation''s growth pattern has changed little over the past two years, the conclusions are likely to be the same for 2006and 2007," Shi said.
"It is impossible for China, a country of 1.3 billion people, to follow the old model of the developed countries by consuming large quantities of energy at the expense of the environment," Chinese Vice Premier Wang Qishan said.
Another problem is the uneven distribution of wealth. Official data from 2007 showed the country''s Gini Coefficient , which measures the inequality of income distribution, has surpassed the warning mark of 0.4, with the per capita GDP of eastern coastal Shanghai standing around 76,000 yuan (11,102 U.S. dollars), more than 13 times that of the rural southwestern Guizhou province.
"The growing income gap among people could increase tension in society, and could nourish wrong developments in terms of crime," former Dutch ambassador to China Van den Berg warned.
Regional disparity remains big. After 30 years of reform and opening up, China''s coastal area has moved from the primary industrialization stage to high-grade industrialization. The western inland is still in the preliminary stage of big economic development.
Meanwhile, economic operations in China now face a series of challenges and uncertainties.
Industrial output in the Pearl and Yangtze River deltas, the nation''s two most important growth engines, rose at a markedly slower pace. Many small- and medium-sized companies, particularly exporters of low-end products, are faced with increasing labor costs.
Also, coastal areas are feeling the pressure of inflation. The price of finished oil remains high, the transport capacity of coal, electricity and oil is tight and prices of raw materials keep rising.
Companies also suffer from decreasing overseas consumer demand, a result of the troubled world economy. "It shows we are not at the end of the reform process," said Chi Fulin, Executive President of the China Institute for Reform and Development.
Chinese leaders are clear minded and steadfast that the drive to reform and open-up the country should speed up.
"Today, if we want to resolve the deep-seated problems that constrain China''s social and economic development, if we want to realize scientific development, we must unswervingly continue to reform and open up," said Chinese President Hu Jintao.
Having gotten rid of poverty on the whole, the country is setting its sights on streamlining the market and administrative systems to build a moderately prosperous society.
"If the past reform was aimed at ensuring enough food and clothing for the people, it is now aimed at goals at a higher level," said Prof. Wang Yukai of the National School of Administration.
On June 25, 2008 China set a guideline for a new round of institutional reform of the State Council, the country''s Cabinet, in an effort to build up a service-oriented, responsible, law-abiding and clean government.
The proposal for institutional overhaul of the central government was endorsed by Chinese lawmakers in mid-March. It involves the establishment of "super ministries" to deal with energy, transport, industry and environmental protection.
Observers say the planned institutional restructuring of the State Council is part of the reform in the political system.
"The conduct of the government is closely related to the achievements of the reform and opening-up drive," said Chi Fulin with China Institute for Reform and Development.
Since the SARS crisis in 2003, people have seen transformation of the government as one of the keys to changing the mode of economic development, said Chi.
"Without substantial changes in government functions, the change in the mode of economic development would be very difficult or even unreachable," he added.
In fact, institutional government restructuring has been tried in a few localities in the past few years. Encouraging results have been reported.
Seven years ago, Shenzhen, the pacesetter of China''s reform and opening up, started pioneering the restructuring of its administrative departments.
"We concentrate the administration of marine, land and air transport in the Transportation Bureau, industry and domestic and foreign trade in the Trade and Industry Bureau, and the management of radio, TV, culture, press and publication, and copy rights in the Culture Bureau," said Xu Zongheng, mayor of Shenzhen.
"These functions formerly scattered in different departments and the reshuffle has resulted in evident improvement of efficiency," said Xu.
Competitive elections of Party officials in neighborhood committees and village committees will be put into practice soon, he added. Source: Xinhua