Reflections on Innovations, Sustainability and Development based Recent Development

in China

Xiulan ZhangSchool of Social Development and Public Policy

Beijing Normal UniversitySeptember 24, 2009STEPS Centre, IDS

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60 Years, 30 Years and Pathways for Future Development

Innovation Matters: Development in a Climate Constrained World

Development in a High-Speed and High Risk Era

Development in a Globalized Era

Sustainability: Social and Environmental Social Resilience and Social Cohesion

Changing Growth Model

Building Resilience Institutions

Crisis: Risks and Opportunities

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Point 1: Rethinking Development and Innovation in a Climate Constrained World

Shift the Thinking of “Emission Right” to “Development Right”As far as CO2 emission is concerned, climate change is a “stock and flow” problem. While the developed countries bear the main historical responsibility for the existing “stock” in the atmosphere, the continued “flow” is increasingly from the rapidly developing countries such as China and India. While the developing countries have every right to have their fair share, the truth is, there is simply not enough “space” left in the atmosphere any more. So, it is time to shift the thinking of “emission right” to “development right”. This new thinking has led China to shift its positions starting 2008.

“Low carbon” but not “low growth”For China, the perception is that the growth is too fragile, and it is necessary to grow first and then come back to deal with the issue of climate change, and the cost of is too high for low rate of growth. It is important to strike a balance between growth and CO2 emission, and the control of CO2 emission does not necessary contradict with the growth, and it can be complementary to the growth.

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“Transfers”, “Catching up” and “Break-though” As climate change looming large and calling for nothing less than another “industrial revolution”, China has seen the profound opportunity to embark on the new path for a low carbon economy, but this time, it may not be to “catch up” but to breakthrough, and even to lead. In fact, as the world 3rd largest economy, China has accumulated profound human resources, advanced technologies, and a relatively mature market economy, as well as quite developed industrial coastal areas. The 30 years reform has proven that China can take up the newly developed technologies quickly and it maybe skip many steps toward more technological advanced economies. The challenge is we really do not know whether we can delink the growth and carbon emission, or more to the point, delinking industrialization with carbon emission. By far, none of the industrialized countries had achieved their wealth with a “delinked” path, but we have to remember that these countries industrialized in a non-climate constrained world, and China and India have to figure out a way to growth with the changes of climates. The new thinking and new position will help China to look into the current growth model.

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Point 2: Financial/Economic Crisis as A Defining Moment for Resilience Development

Different Approaches to Uncertainty and Risk1. Predict and Prevent Risks2. Foresee and Insure against Risks3. “Take a Licking and Keep on Ticking”: Resilience

Resilience entails a systemic ability to absorb the disturbance and accommodate the change that comes from realized risksAdaptability: How much can actors actively influence managing resilience. Transformability: The capacity to recreate structures altogether when the existing system is untenable.

(Walker, Holling et al 2004)

Risks and Development “Sustainable Development” is development that does not leave you hollow. “Resilient Development” is development that does not leave you brittle.

Obviously interrelated!

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Resonant systemic risks: A somewhat under-explored part of development studies. The unintended consequences of certain development bring stresses (pollution, social imbalances, etc) and these stresses on their turn can represent a risk to continued development.

Think inequality: too much inequality and you can create social tension, or insurmountable gaps in human capital formation, or many other pitfalls. Similarly, developmental pressure on the environment can collapse it and take down your economy with it. Or create international tensions that can derail development the hard way (war)

So, we are interested in these complex resonances, this mutual reinforcement of dangerous uncertainties

Risks and opportunities both, as that resonant multiplier effect applies to social change in positive ways, too.

This requires a more comprehensive view of the risk structure of development than the specific “sectoral” approach that is usually used.This also requires a more comprehensive view of the “development path” (e.g., fossil fuel dependent industrialization, global warming, inequality, etc).

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Exploring the Dynamics of DevelopmentUnderstanding developmental risks and uncertainty needs a better understanding of the transition points in the process of economic development and social transformation.

We need to build a better understanding of the phase changes in the process of development:

the inflection points in productive activity as production goes up the rungs in the value ladder, the demographic and social points of no return, the turning points of cultural change and lifestyles, and the tipping points of liberalization and democratization.

Knowing where those phase change points are will allow institutions to adapt and change as development progresses, allowing them to cope with the stresses and shocks of development.

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China today is in the midst of multiple transitionsFrom a traditional agrarian society to an industrial nation

From rural to urban

From a planning to a market-based economy

Along with it, the reform of the financial system, the social welfare system, education, medical care, etc, etc.

Each transition point represents an array of risks and opportunities.

Even more so, when Those transitions happen at a stunning speed and at a massive scale;

Those transitions happen in a world of global change and globalization

The Resilience perspective offers new insights and approaches that are useful for addressing these risks TO/FROM development.

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Building Resilient Institutions

“Normal” emphasis of policymaking is on risk mitigation: identifying risk and attempting to reduce it or insure against it.

Or alternatively, it focuses on clean-up: react after a risk has been well and truly realized (and make sure that blame is well apportioned away from you!).

The Resilience approach emphasizes making risks tolerable, in a very specific sense: risks should mostly fall within the tolerance of the institutions and structures that will take the brunt. Plan for bending, not cracking.

You don't so much avoid risk as build for it. Stuff happens. Take it in.

Even natural disaster risks can be mitigated if institutions and infrastructure are designed to take a hit and bounce back from it fast.

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Identify Entire Systems of Risks and Risks to the System

Not so much identifying isolated risks, but identifying the vulnerabilities in the system that fail to cope with realized risk and unpredictable events.

Better to identify the next SARS, or to improve the public health communication system?

Resilience and Adaptability:

High risk era needs a high flexibility approach. Crossing the River By Feeling the Stones: More than random improvisation: knowing HOW to walk in slippery surfaces.

Learning how to swim not a bad idea. Just in case…

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Point 2: Crisis as Defining Moment for Resilience Development (cont.)

In Chinese, Crisis means “Risks and Opportunities”

1997 Asian Financial Crisis has profound impact on China’s development path

Export-oriented growth

Reform of financial institutions

Reform of State-Owned Enterprises

Expansion of Higher Education

Establishment of Social and Medical Safety Net

Social development was incorporated to development plans:

four dimensions of development: political, economic, cultural and socialNew emphasis on the livelihood and wellbeing of citizens

all people to enjoy their rights to education, employment, medical and old-age care, and housing.

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Current Financial Crisis: A Defining Moment for Resilience Development

A quick, proactive and strong reaction by the government in China: A four trillion RMB stimulus package.

Transformation of the Economies and the InstitutionsTransformation of the industrial structure in costal areas

Expansion of domestic market

Relocation of firms in the central areas

Rural development as a cushion for shocks

From welfare phobia to welfare states: welfare is not longer to be seen as the end of development, rather the process of development.

Managed urbanization

Consensus: Building strong and resilient institutions, social structures and social connections parallel to the development of strong economic and productive structures

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Defining Moment: A New Welfare State Agenda

Social Assistance: Safety Net for All (2008)Areas included: cash, medical, education, disaster, homeless, housing, employment, legal, temporary, and maternal assistanceLegislations: Social Assistance Law

Social Insurance: Coverage for All (2020)Areas included: old-age, medical, unemployment, worker’s compensation, and maternityLegislations: Social Security Law Disability: rehabilitation, education, employment, social security and handicap-accessible facilities.

Health Care (2020)Basic health full coverage for all urban and rural residents by 2020. Sound health care institution management and operational systemUniversal access to health care.

Education:Full coverage of 9 year compulsory education was achieved in fall 2008Increased funding for vocational educationDeveloping of the 2020 mid-term and long-term plan

Housing:Low rent housing, Public housing, Rural house renovation for the poor

Employment Services, Social ServicesPoverty Alleviation New Strategies

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Defining Moment: A New Welfare State Agenda

Key DevelopmentsGovernment responsibilities

Increased funding

Regulation and enhancing implementation capacity

Legislation

Entitlement expansion

System integration: horizontal and vertical

PrioritiesIncrease access to basic health care, education, and social protection

From rural-urban divide to gradual integration

Increase quality of services and level of benefits for all

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Point 3: Improved Living Standard, Welfare Programs and Rural Infrastructures: Diversified Human Resources for Indigenous Innovation

Sea Turtles to Major Cities: Global Cities and Attractive Places for LivingSupport the “Indigenous Innovation” StrategyAccess to global capital, networks, and knowledgeManagement skills

Migrants to Cities: Seeking Employment Opportunities and Investing in ChildrenChildren Get Better Education and Health Care (A new generation)Labor force for Export-oriented Industries

New Countryside for Migrants with Skills and Knowledge to ReturnAccess to Credit and LoansAccess to Local Labor forcesAccess to Increased Government Support (“Middle China Development Plan”) and Local Policies(2007 Survey of 301 Villages, Returned Migrants 37,000. 16% of them started their own businesses, and created 30 million jobs)(Many Reports on 2008 returned migrants to start businesses)

Thanks You!!