Restructuring Key to Economy

The 10th Five-Year Plan for National Economic and Social Development (2001-05), which will be instituted this year, marks the beginning of a new round of strategically important economic restructuring.

This is among the hot topics of discussion among members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) attending the current session of China's top advisory body.

According to the new five-year plan, China will readjust the structure of its agriculture and rural economy, continue to make progress in the IT industry, develop the service sector, give priority to high-tech industries, accelerate the pace of urbanization, and launch the strategy of developing the less-developed western region in an all-round manner.

"China's economy has reached such a stage that it will not make any further progress without readjustments," said Xiao Zhuoji, a law professor from Peking University.

The existing industrial structure, which was shaped to serve the planned economy, is irrational and hampers the country's modernization drive and its involvement in economic globalization, Xiao said. He called for greater efforts to develop the service, high-tech, banking and IT sectors.

After two decades of reform, great changes have taken place in China. Gone are the days when Chinese suffered from a dearth of commodities. China is changing with the whole world amidst sweeping technological revolution, structural readjustments and economic globalization.

Economist Dong Fureng spoke highly of the readjustments put forward by the new five-year plan. "It is not 'adaptability' restructuring in a general sense, as in the past," he noted. "It is a new round of restructuring that is motivated by the new technological revolution, which will have a significant bearing on the whole economic situation and long-term development. It is not local. It is an all-around restructuring covering the industrial structure, regional structure and town-and-country structure," he stressed.

Lin Yifu, director of the China Economic Research Center of Peking University, said the possibility of changes in the economic structure of a country depends on the speed of technological progress. The technology factor is crucial to China's industrial restructuring, Lin stressed.

The new five-year plan makes the expansion of domestic demand a "long-term" principle of strategic importance. The intrinsic logic is that expanding domestic demand would provide greater room for maneuver and strengthen resistance against international economic risks in the complicated and capricious international environment, said observers.

The adjustment of regional and town-and-country structures is essential for stimulating domestic demand, said Professor Lin Yifu. The western China development drive that started last year should accelerate urbanization there and in eastern and middle regions.

Professor Xiao Zhuoji said structural adjustment should be left to market forces to make enterprises more active, more competitive and more capable of innovation. In the past, he said, structural adjustment used to be done by the government through administrative means, thus resulting in "forced marriage," "ownership discrimination" and "violation of economic principles." More often than not, such structural adjustments were resisted by localities out of protectionism, he noted.

Zhou Shulian, a researcher from the Institute of Industrial Economics of the Chinese Academy of Social Sciences, called for the setting up of a mechanism that can ensure effective raising, rational distribution and efficient use of financial, human and technical resources in the optimization and upgrading of structure.

Wang Mengkui, director of the Development Research Center of the State Council, believes structural adjustment is not just a matter of a few years. Developing high and new technology industries and transforming traditional ones will run throughout the whole modernization process.

It will take half a century or even longer before the movement of the rural population into non-agricultural activities is realized, and to really develop the western part of the country.

"The official launching of this new round of strategic restructuring marks a new stage of development for China's economy," the economist said.

(Xinhua 03/09/2001)

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