Seven Percent Growth Rate Attainable: Economists

Chinese economists said Thursday that the annual 7 percent economic growth rate set for the next five years is feasible and attainable, and that it will spur the Chinese Government to give top priority to improving the quality and efficiency of economic development.

The Outline for the Tenth Five-Year Plan for National Economic and Social Development (2001-2005) predicts that the annual growth rate of the national economy of China will be 7 percent in 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 here Thursday afternoon.

Premier Zhu Rongji said in his report on the Tenth Five-Year Plan that although the Chinese Government has adjusted the annual economic growth rate down to 7 percent for the next five years, arduous efforts are needed to realize the target on the basis of improving economic efficiency.

NPC deputy Ji Jinshan, an expert of 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, a turnaround of large and medium-sized state-owned enterprises and a bullish development trend of the Chinese agriculture all constitute favorable conditions for achieving the goal of 7 percent economic growth in the five years to come.

Experts attending the fourth session of the Ninth NPC pointed out, deflation remains a problem in the current economic development in China. Last year, the savings deposit of the Chinese people totaled 6.4 trillion yuan (about 771 billion U.S. dollars), and the consumer price index rose by 2 percent.

According to an analysis 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 the Chinese Government is working in this direction.

Economist Yu Zuyao, an NPC deputy, pointed out that the pro- active fiscal policies, aiming to curb deflation, will bring along certain fiscal and financial risks, including inflation.

At present, national debts account for less than 15 percent of the gross domestic product (GDP), which is still within the scope of safety, the economist said. However, the national debts now account 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 economic development, said Zeng Peiyan, minister in charge of the State Development Planning Commission.

Zeng said the central government revenue went up by 16.9 percent in 2000 compared with the previous year.

The central government revenue will account for an increasing proportion of the GDP and the revenue of central and local governments in the coming five years, enhancing the central government's ability to exercise macroeconomic controls and repay debt. "A serious fiscal crisis is not likely to happen," Zeng noted.

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

To take up challenges brought by China's accession to the World Trade Organization (WTO), China will enter a critical period in the next five years to reform its state-owned enterprises and carry out strategic industrial restructuring.

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

NPC deputy Li Wuwei, an economist, said that looking into the next five years, the up-beat development trend of the Chinese economy is irreversible. Li said, the Chinese economy has turned for the better since the second half of last year.

Li listed scores of favorable factors that help push forward China's economic development, such as a fast development of heavy chemical, machine-building, service, real estate, information technology and high-tech industries.

Additionally, the private economic sector which expects to increase by 10 percent on a yearly basis and the entry of multinational corporations and inflow of international capital into China are all cited as positive factors behind China's economic development.

NPC deputy Han Shengyu, director of Hebei Provincial Development Planning Committee, said that China has the experience of successfully battling the effect of the Asian financial crisis and it is capable of handling inflation and deflation as it did in the early and late 1990s respectively.

He expressed confidence that China will maintain an annual 7 percent economic growth rate in the coming five years, saying, "It is practical and attainable."

(Xinhua 03/15/2001)