Coping with global inflation

In this context, China should strive to transform its established economic development mode and push for economic restructuring to realize steady and comparatively rapid economic development over the next five years.

To this end, it should first promote its economic transformation from investment and export-driven to consumption-driven and try to give resident consumption a bigger role in driving national economic growth.

China's current high investment ratio, which was 47 percent in 2009, and its low consumption ratio, 35 percent in 2009, are the result of its long-term emphasis on investment and lack of attention to consumption, and are unsustainable. The government has vowed to adjust the structure of national income distribution, increase the incomes of middle- and low-income groups and raise the ratio of resident consumption, but no substantial progress has been achieved so far.

The country should try to achieve an essential breakthrough in this regard during the 12th Five-Year Plan period, such as taking more concrete and effective measures to expand employment, reform the current taxation system, promote urban and rural integration and expand public consumption.

In terms of industrial structural adjustment, China should change its economic growth and try to promote coordinated development among its first, second and tertiary industries, especially by boosting the development of the tertiary sector. The sluggishness in the development of the service sector has not only seriously hindered the expansion of domestic employment and consumption, it has also become a major obstacle to the further development of the first and second industries.

The main reason for the slow development of the service industry is the high business tax on this sector. The lack of a well-developed financial network to offer credit to small- and middle-sized enterprises has also hampered its development, especially small-scale operators. Therefore, the country should try to develop financial, information and logistics industries and introduce a series of preferential policies for the tertiary sector to boost its development.

China should turn to technological progress and improvements in management expertise and labor quality rather than extensive consumption of materials to prompt its economic growth. To facilitate this process, the country should try to improve its self-innovation capability, especially with regard to the Internet, new energy, energy conservation and emission reductions and biological technology, as well as manufacturing and electric cars.

At the same time, more concrete steps should be taken to narrow the gap between urban and rural areas in a bid to build a urban-rural integrated system, promote agricultural modernization and accelerate the construction of the socialist new countryside.

The author is a member of the National Committee of the Chinese People's Political Consultative Conference and deputy director of the Subcommittee of Economy of the advisory body.