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Outstanding issues in economic life deserve due attention |
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16:14, August 14, 2007 |
There exist some outstanding problems with China's current economic performance, which should merit high, due attention from the government and people. It should be taken as the primary task of the current macro-economic control to prevent economic development from turning overheated in the wake of fast growth. In the course of economic growth, some issues have been resolved to varying extent, while some other issues still require step-up efforts of a longer period to attain remarkable effect.
With the shift of the mode of economic growth and on the basis of in-depth reforms, the material basis, set-up structural conditions and response capacities are expected to go on improving, the potential for China's economic development is sure to release continuously, and the masses of people will enjoy more material benefits from the economic performance accordingly.
These points of view constitute a gist of an article contributed by an economic situation analytical group of The Development Research Center affiliated to the State Council, or the central government. The article is carried on the People's Daily on Tuesday, or August 15, and its detailed account reads as follows:
China's economy has continued to be in the state of a relative fast growth with fairly good returns and a stable performance since the start of this year. Meanwhile, there also exist some protruding problems that call for attention. They are manifested mainly in the ensuing phenomena: Foreign trade surplus continue to extend, currency credit growth is somewhat too fast, and the investment increase range is on the high side; and the growth range in consumption price for residents is on steady rise, and the situation with energy conservation is relatively stark. These issues call for a correct recognition, an all-round analysis and a sober-mind to handle them, so as to prompt their settlement.
There are some intrinsic ties between the excessive growth of investment, the excessive release of credit and the excessive external trade surplus. Generally speaking, foreign trade surplus means exports exceeding imports. The excessive foreign trade surplus is ascribed mainly to the somewhat too rapid credit growth in recent years, whereas the rise of currency credit will in turn possibly lead to the aggravated investment growth.
The People's Bank of China (PBOC), or the Chinese central bank, by means of taking such policies measures as raising interest rate and reserve requirement ratio and issuing central bank bills to sterilize the massive flows of funds, can, to a great extent, curb both the quantity and speed of the shift of commercial bank deposit funds to the credit funds, and consequently stem the growth of currency credit. It is precisely for this reason that the credit growth is still kept within the anticipated scope despite China's ballooning external trade surplus and foreign exchange reserve in recent years. With relatively appropriate growth in credit fund and concerned efforts from various socio-economic sectors, therefore, the investment increase can be reined within a rational extension.
The growth rate of fixed assets investment was 25.9 percent in the first half year, down by 3.9 percentage points than in the same period last year. This achievement represents a positive effect for macroeconomic control as well as an accumulated outcome from a step-up effort to restrict market competition. In June, nevertheless, there was a somewhat rise with the assets investment in towns and cities, and so it is vital to go on deepening the market-oriented economic reforms in a bid to stem the rebound of investment growth range.
At end-June 2007, broad money M2 stood at 37.78 trillion yuan, representing an increase of 17.06 percent year on year, down 1.37 percent over a year ago; China's outstanding local-currency loans rose 16.48 percent in June from a year earlier to 25.08 trillion yuan (or 3.31 trillion US dollars), 1.24 points higher than a year ago, according to PBOC, the central bank. The growth of currency credit was somewhat fast, but the financial operation was stable on the whole. And the monetary policy should be kept stable and appropriately tight. In view of historical experience, a serial monetary policy measures will show an evident effect only after a period of time for implementation.
Sustained rise in foreign trade surplus and Forex reserve indicates an end with China's long-term, strained shortage of foreign currency, a rise in the country's comprehensive national strength and a major hallmark of economic development. In the meantime, a host of new problems, such as added difficulties in the operation of monetary policies, hastened contradictions for domestic environment resources and the rise of frictions in the international trade.
It should also be acknowledged that the fairly good, favorable advantage from the lower labor-force cost in China and the shift of overseas manufacturing industry to the country are bound to lead to a high ratio of its processed trade in the export volume and the ensuing trade surplus for the country. Furthermore, foreign trade surplus rose again by a big margin last year and the production capacity of China's surplus heavy and chemical industries shifted to the world market.
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