The Outline for the 10th Five-Year Plan for National Economic and Social Development (2001-05) predicts that the annual growth rate of the national economy of China will be 7 per cent for the coming five years. The outline was adopted with a high approval rating by the Fourth Session of the Ninth National People's Congress (NPC), which closed on Thursday afternoon.

Premier Zhu Rongji said in his report on the 10th Five-Year Plan that although the Chinese Government has adjusted the annual economic growth rate down to 7 per cent for the next five years, arduous efforts are needed to ensure that the purpose of the adjusted rate, the improvement of economic efficiency, is realized.

NPC deputy Ji Jinshan, an expert on macroeconomic controls and financial affairs, said that in addition to the good economic situation worldwide, the improving performance of the Chinese economy since early 2000, the turnaround of large and medium-sized State-owned enterprises and the bullish development trend in Chinese agriculture all constitute favorable conditions for achieving the goal of 7 per cent economic growth in the coming five years.

Experts at the just-concluded Fourth Session of the Ninth NPC pointed out that deflation remains a problem in economic development in China. Last year, the savings deposit of the Chinese people totaled 6.4 trillion yuan (US$774 billion), and the consumer price index rose by 2 percent.

According to an analytical report issued by the National Bureau of Statistics (NBS), factors that have led to deflation include China's problematic product mix and people's expenditure-related uncertainties. It has become a task of top priority for the Chinese Government to increase the income of farmers, who account for 70 percent of China's population, through agricultural restructuring and adjustment of the farm product mix.

NPC deputy Zhu Zhixin, director of the NBS, said that the issue of the income of farmers will be finally solved through agricultural industrialization and development of small cities and towns, and that the Chinese Government is working in this direction.

Economist Yu Zuyao, an NPC deputy, pointed out that the proactive fiscal policies, aimed at curbing deflation, will bring along certain fiscal and financial risks, including that of inflation.

At present, the national debt accounts for less than 15 percent of the gross domestic product (GDP), which is still within the scope of safety, the economist said. However, servicing the national debt now accounts for more than 70 percent of the central revenue and that could make government finances run into a bad cycle of borrowing new debt to repay existing debt, he pointed out.

On the other hand, this year funds raised by treasury bond issues will not be used in construction of redundant projects, but will go into key profitable projects. All the projects are expected to contribute to economic growth and will accumulate strength for future development, said Zeng Peiyan, minister of the State Development Planning Commission.

Zeng said the central government revenue went up by 16.9 per cent in 2000 compared with the previous year. Central government revenue will account for an increasing proportion of the GDP in the next five years, enhancing the central government's ability to exercise macroeconomic controls and repay debt.

Economist Wu Jinglian said the Chinese Government has begun to take some measures, including reform of State-owned enterprises, to promote economic development by stimulating demand and expanding supplies at the same time.

Following China's accession to the WTO, economist Lu Baifu said, some enterprises will be eliminated by the intensified competition, but at the same time, fierce competition will force key Chinese enterprises to improve their internal management and operation.

(Xinhua 03/17/2001)