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Fast Growth, High Efficiency and Low Inflation Feature China's Economy (II)
In 2001, the pace of the three major economies of the United States, Japan and European Union (EU) has further slowed down, the world economic development has encountered difficulties unprecedented in the past 20 years.

In the year soon to be over, hundreds of millions of Chinese people, under the leadership of the Communist Party of China (CPC), are taking firm step in overcoming various difficulties, and through their hard work, have achieved a good beginning in carrying out the blueprint of the "10th Five-year Plan", as evidenced by the new, noticeable achievements in economic construction: a 7.3 percent GDP growth over the previous year is expected this year, it is entirely possible to reach the economic growth target set early this year.

Beijing's success in its bid for hosting the 2008 Olympic Games, the successful convocation of the APEC Conference in Shanghai, China's upcoming accession to the World Trade Organization (WTO) and other major events have attracted the attention of the world people who hail the good momentum of China's economic development. In the complicated and changeable external environment, we have persisted in the principle of expanding domestic demands, implemented the pro-active fiscal policy and a robust monetary policy, as a result, a situation of rapid growth has appeared in economic operation, bringing fresh vigor for world economic development.

Macro-economic Decision: Being Predictable, Scientific and Efficient

Since the beginning of this year, due to the synchronous slowdown in the economic development of the world's three major economies-the United States, Japan and EU, the deterioration of the international economic environment will be worse than the Asian financial crisis. The acceleration of economic globalization has added burden on many countries and regions around the world. Under such an international environment, it is really not easy for China's economy to maintain a growth rate of over 7 percent.

The fact that China's economy still maintains a rapid growth under the circumstance of a downturn of the world economy shows that China's macro-economic policy decision is predictable, scientific and efficient.

The Central Economic Work Conference held at the end of November last year, while planning this year's economic work, clearly pointed out that it was necessary to persist in solving the problems arising in the course of advance by the method of development, promptly adjust the macro-economic decision in light of the change and development of the situation and constantly improve it in practice.

The Central Working Conference held this February called on comrades of the whole Party to rally more closely around the Party Central Committee with Comrade Jiang Zemin at the core and, uphold Deng Xiaoping Theory and the Party's basic lines as the guidance and comply with the requirements of the "three represents", to get a clear understanding of the situation, grasp the general situation, make concerted efforts, do solid work in real earnest, and work hard to accelerate the reform, opening up and socialist modernization drive and to achieve the magnificent goals of the "10th Five-year Plan" for social and economic development.

The Fourth Session of the Ninth National People's Congress (NPC) held in March this year made predictable analysis and judgment on the difficulties that may be encountered in China's economic development resulting from the slowdown in international economic growth rate and inadequate domestic demands and made relevant arrangements.

The desirable performance of China's economic development this year once again proves the correctness and timeliness of implementation of the policy of expanding domestic demands.

China has implemented a macro-control policy based mainly on expanding domestic demands for four consecutive years and has achieved remarkable results since 1998. In the middle of 2000, China's economy began to take a turn for the better, the GDP growth rate was restored to 8 percent and the years-long economic declining trend was reversed, this has not only helped China shake off the adverse influence of the Asian financial crisis, but also has greatly enhanced reserve strength for further development.

On the basis of past years' practice, this year China has continued to implement the proactive fiscal policy and a robust monetary policy to boost the sustained, rapid and healthy development of the national economy.

China has continued to issue additional treasury bonds worth 150 billion yuan, which is mainly to be used in infrastructure construction, the large-scale development of the western region, technical renovation and the continuation of some projects using national bonds. National bond investment arranged for this year is budgeted at 150 billion yuan, this, plus the 50 billion yuan national bond funds carried over to this year from last year, makes usable national bond funds reach 200 billion yuan, higher than the average annual 120 billion yuan level in the previous three years. Of the 50 billion yuan national bond funds to be used for developing the projects of the western region, 20 billion yuan is arranged to be used in the first half of the year, the remaining 30 billion yuan can be put into use in the second half of the year.

In the face of the many unfavorable factors for economic development, continued efforts have been made to implement the principle based mainly on expanding domestic demands to maintain the continuity and stability of the monetary policy, we have made flexible use of a variety of money policy tools to maintain an appropriate growth in the money supply.

Increase of investment is integrated with expansion of consumption. This year, we have continued to regard the expansion of consumption as an important content of the implementation of the proactive fiscal policy, and have further increase effort for the policy of expanding consumption. First, we increased the wages for staff in organizations and institutions and pensions for retirees twice in April and October respectively. Second, central and local financial departments have dramatically increased expenditures on social security, basic pensions for enterprise retirees and basic living costs for laid-off workers from State-owned enterprises have been issued on time and in full. Third, we have tried by every possible means to increase farmers' income. We have continued to increase input in agriculture to promote management of agriculture in an industrial way, we have carried out the policy of supporting the development of leading enterprises, thus creating conditions for increasing farmers' income and opening up rural markets. In view of the serious situation of disasters this year, the State has exempted relevant agricultural tax in villages of the afflicted areas. Fourth, through the adoption of such measures as increasing input in tourist infrastructure facilities, encouraging the development of housing credit, reducing car purchasing tax and abolishing fees on the initial installation of mobile telephones, we have improved the policy of consumption and promoted consumption growth in the fields of tourism, housing, motor vehicle and telecommunications.

It is emphasized that every possible means should be tried to expand exports. To deal with the situation featuring the slowdown in the world economic and trade development and a decline in international market demands, we have persisted in the strategy of diversifying the export market, actively opened up new markets and adopted a series of measures to encourage exports and have thus achieved the anticipated results. By implementing and stabilizing the various measures including export tax refund, we have maintained the continuity and stability of policy. We have speeded up adjustment of the mix of export commodities, increased the proportion of the export of electromechanical products and enhanced international competitiveness of export. We have continued to deepen reform of the foreign trade system and foreign trade enterprises, granted production enterprises more right of import and export management and enhanced the vigor of enterprises. We have waged resolute and in-depth special struggle against the gaining of export tax refund through fraud and deception and struggle against smuggling and illegal arbitrage of foreign exchange, which have played a desirable role in improving the foreign trade environment.

For a period of time to come, fairly big uncertainty and complexity will continue to exist in international economic development. China is a large developing country with a population of nearly 1.3 billion, it is faced with a very heavy task of economic development. In the face of the complicate and changeable international situation, especially after entry into the WTO, China's economic construction will be confronted with both new opportunities and new challenges. Nevertheless, China has vast domestic markets, abundant human resources and a stable social environment. So long as we persist in the principle of expanding domestic demands, implement the proactive fiscal policy and a robust monetary policy, calmly cope with the situation and pursue the good while avoiding the harm, we will certainly be able to grasp the initiative of development in our own hands, march forward triumphantly and maintain the rapid and stable economic growth.

(People's Daily November 29, 2001)

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