A senior Chinese economic official warned in Beijing Monday that the country's efforts to cool down the economy should "not be loosened up at all" as current achievements from macro-control are just "preliminary".
The unhealthy and destabilizing factors in the economy have been curbed -- but "not on a consolidated basis," said Minister Ma Kai in charge of the State Development and Reform Commission, the economic policy-making headquarters.
"New problems are popping up as we are addressing the old ones," he said, pointing to investment in fixed assets last year, an indication of how much the government was spending on major infrastructure projects.
"Typically, the resurgence of investment boom is still possible. There were 150,000 new projects last year. In December alone, there were 20,000," he told a press conference during the Third Session of 10th National People's Congress, China's top legislature.
China targets an 8-percent economic growth rate in 2005, lower than the robust 9.5 percent registered last year.
Ma said, "Government intervention and the basic role of market in allocating resources should reinforce each other."
Economic growth patterns should be optimized, the minister added, citing that the country's gross domestic product (GDP) is now just one-eighth of that of the United States, but consumes half of the power electricity that the US does.
The newly installed capacity reached 50.55 million kilowatts last year, an annual record in the world. "The increase of electricity production capacity, however, still cannot catch up with the pace of demand growth," he said.
China began 2004 amid serious worries that the economy was dangerously overheated.
Inflation rose at an alarming rate, hitting a peak of 5.3 percent last July and August. Fixed asset investment hit ten-year highs in the January-March period, growing by 43 percent.
This prompted the central government to order energy-saving measures and tell local officials to cut spending on pointless prestige projects and unneeded factories, roads and other facilities.
A raft of market-based macro-control measures including the first bank interest rate hike in nearly a decade were taken before red-hot investment growth was effectively curbed and the consumer price index, a key barometer of inflation, slowed sharply to 1.9 percent last January from an average 3.9 percent in 2004.
"We have avoided a roller-coaster in the economy," Ma said.
(Xinhua News Agency March 7, 2005)