Nation Faces Six Problems in Economic Development

China's economic development during the next five-year plan (2001-05) must tackle six major problems, says the latest issue of Outlook, a Chinese news weekly.

The magazine says that great changes, such as the disappearance of a commodities shortage and the forming of a buyer's market, have taken place in China during the current five-year plan period (1996-2000).
"The changes mark a completely new stage of development for the Chinese economy," the article says, adding that these changes demand greater efforts in solving the six major problems.

According to the magazine, the first problem facing the economy will be how to maintain and improve the quality of the economic growth rate.
In the past years when domestic demand was huge, it was not difficult to raise the economic growth rate by channeling more investment into the national economy.

However, it becomes more difficult to support high economic growth in a period of technological innovation with its new and more expensive products and equipment, it said.

The second major problem will be how to quicken reform while emphasizing national stability.

When the Chinese economy enters a period of increased efficiency, more effort will be needed to control resources allocation.

The reform of labor, income distribution, social security, government functioning, macro-management, and the market system are also expected to be further developed .

All this and more will touch on the established interests of many people, which in turn will have an impact on overall social stability.
The magazine said that the third major problem will be how to achieve sustainable development while efforts are taken to speed up the country's industrialization process.

As the world's most populous country, it is necessary that China promote its industrialization. However, the fact that the country's per capita natural resources and space are limited means that it must pay enough attention to sustainable development in the process.

"The fourth problem will be how to cope with the expanded migration of rural workers," the magazine says.

China's industrialization calls for the shifting of rural labor to urban areas. However, this trend contradicts the necessity of pooling capital and resources into capital- and technology-intensive industries, which needs fewer workers.

It will become a major challenge for China to upgrade its industrial sector while gearing the economy more to both the domestic and international markets, the magazine notes.

Early this century, the national economy will become more integrated into the international one. "This will pose a severe test for China's capital- and technology-intensive industries," it says.

While China's labor-intensive industries still enjoy some cost advantages, the capital- and technology-intensive industries are at a disadvantage in competing with their foreign rivals.

The article predicts that the last problem for China to face will be how to best deal with the relationship among reform, stability, and development.

In the next few years, the change in China's economic growth mode and the emphasis on its economic restructuring will inevitably lead to sharp conflicts of interests.

In particular, China's huge work force, expected to reach 860 million people by the end of this year and 910 million by the year 2005, will pose a great challenge to the country when slipping economic growth offers fewer jobs, the magazine points out.

"The 10th Five-Year Plan will become the transitional period for both our economic development and our economic structure," it says.

The nation must keep a clear mind while seeking the proper development path in a fiercely competitive global environment, the article concludes.

(Xinhua 04/04/2000)

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