Chinese premier expects 7 percent economic growth, stressing balanced development

cctv.com 03-05-2004 16:14

Chinese Premier Wen Jiabao said in Beijing on Mar.5 that his government wants a 7 percent economic growth for 2004, expecting to keep the economic speed train running stable while preventing the wheels from becoming too hot.

The government sets the target in order to seek an "all-round, balanced and sustainable development of the economy and society" and avoid any "drastic fluctuations", Wen said in his report on the work of the government delivered at the opening of the Second Session of the 10th National People's Congress, China's parliament.

China registered a stunning economic growth of 9.1 percent in 2003 though hit hard by the severe acute respiratory syndrome (SARS)outbreak.

Wen, who took office a year ago, did not give an explicit assessment on whether the Chinese economy is on the brink of an overheating state or not, but he listed economic foes such as "excessively broad scale of investment, the serious problem of copycat investment and low-level, redundant construction in some industries and regions".

While still pursuing a proactive fiscal policy, Wen told the 2,904 NPC deputies that the government plans to cut this year's construction treasury bond issuance by 30 billion yuan to 110 billion yuan.

China began issuing such bonds in 1998 in a bid to expand investment to stimulate the then slowing economic growth.

The issuance of construction treasury bonds is an interim policy adopted at a time when insufficient demand and the scale should be reduced gradually as the nongovernmental investment accelerates, Wen said.

Meanwhile, the government should make full use of the role of monetary policy, appropriately control the size of credit and optimize the credit structure to support economic growth while fending off inflation and financial risks, he said.

The consumer price index (CPI), a barometer measuring inflation, rose 1.2 percent in China last year. The prevailing view of domestic economists points to a further CPI increase in 2004.

POLICY DILEMMA

In the past two decades, the Chinese economy grew at an average rate of over 8 percent. Government officials at local levels generally hope for a fast economic growth, which would help improve infrastructures and hopefully bring down unemployment.

Since China began to speed up the reform of the state-owned enterprises 10 years ago, the number of laid-off workers has gone up sharply. The jobless rate in urban areas rose to 4.3 percent last year, and is forecast at about 4.7 percent this year.

However, it's equally important for the government to avoid any major price hikes resulting from possible economic overheating. Income disparities have widened remarkably in China for the past decade. A recent survey indicates that less than 10 percent of the population enjoy more than one third of all private savings in banks, which meant the majority of ordinary people are more vulnerable to price changes.

"Development in different regions of the country is not balanced; the income gap is too wide among some members of society; and pressure on resources and the environment is mounting," Wen noted in his report.

Mu Degui, an NPC deputy from the underdeveloped remote province of Guizhou, agreed to Wen's judgment. Stepping out of the Great Hall of the People after having heard Wen's report, Mu said to reporters that "it is now necessary for the government to tackle the problem of widening gap between the rich and poor, and keep a coordinated development between the economy and society, between people and environment."

SCIENTIFIC CONCEPT OF DEVELOPMENT

Elaborating on the government's principal tasks for 2004, the premier underlined the Scientific Concept of Development, a term frequently used by top Chinese leaders recently to signal a shift of the government's development philosophy from a growth-centered one to a people-centered one.

The central authorities will pay more attention to exercising macro-control, balancing the interests of all parties, putting people first, and promoting reform and innovation in a balanced way, Wen said.

According to the policy package contained in the government work report, the overall growth in fixed asset investment will be scaled down in 2004, but public spending on education, health care, environmental protection and other social undertakings will rise at a higher speed.

Development of the non-public sector will be encouraged to absorb more jobseekers. The government's budget spending to aid reemployment services will shoot up by over 50 percent this year, in hopes of helping five million laid-offs get jobs.

More public funds will be poured into rural areas, where nearly 900 million people, or nearly 70 percent of the country's total, live. Their average income stands at just one third of that of urban residents currently.

The NPC deputies burst into applause at the meeting when Wen said that the central government plans to earmark more investment in the farming sector, reduce the agricultural tax rate from this year and eventually rescind the tax in five years. This measure means the farmers will have an additional seven billion yuan to spend this year alone.

"Anyway, growth rate is important. But what people get from the growth is more important. I feel the 7 percent growth combined with detailed measures targeting different problems is appropriate," said Lu Ruihua, a deputy from economic powerhouse Guangdong." The central authorities have proven to be sober-minded and thoughtful by presenting such a policy package to us," said Lu.

Editor:Wang  Source:Xinhua News Agency