In Beijing on Thursday China's 2006 Central Economic Work Conference closed after agreeing on major economic strategies and policies for 2007. The conference made balancing international payments a major goal for 2007.
Chinese leaders pledged to redouble efforts to expand imports and overseas investment while maintaining rational export growth and the use of foreign investment.
President Hu Jintao and Premier Wen Jiabao gave speeches at the three-day conference.
China's trade surplus reached US$133.62 billion in the first ten months this year. This exceeded the US$101.9 billion for the whole of 2005.
Having attracted more foreign investment than any other developing country for the 15th consecutive year China is estimated to hold about US1 trillion in foreign exchange reserves.
The growing trade surplus has led to trade friction while the large international payments surplus has increased pressure for appreciation of the Chinese Renminbi currency.
Experts suggest too much foreign exchange has forced the central bank to issue more Renminbi causing excessive fluidity in domestic financial markets.
Conference delegates proposed that the government should focus on bringing in advanced technologies, management and foreign expertise. The government would continue the strategy of "going global" by encouraging overseas investment, officials said.
China's direct investment overseas neared US$12.3 billion last year, according to the 2006 World Investment Report by the United Nations.
The report shows China's overseas investment accounted for only 0.59 percent of global foreign investment last year. This is much less than the 4.4 percent share of global gross domestic product (GDP) value and the 6.5 percent of world trade.
The government should increase export tax rates on primary resources like unprocessed steel and encourage imports of technologies and resources, said Chen Dongqi, vice director of the Academy of Macroeconomic Research with the National Development and Reform Commission.
Another focus of the conference was the country's low-income groups. Delegates proposed to boost the income levels and consumption of rural residents and the urban poor. They called for greater attention to be given to creating employment opportunities.
At the same time the proportion of middle-income groups should steadily increase while excessively high earnings be effectively adjusted through taxation, officials urged at the conference.
Data shows the total consumption by the Chinese government and public accounted for 51.1 percent of the country's GDP in the first three quarters. This is down from 62 percent in the 1980s.
The proportion of public consumption in the GDP hit a record low last year. It dropped to 38.2 percent from 48.8 percent in 1991.
"The key to expanding domestic consumption is to stimulate consumption especially among rural people and speed up the development of public services in rural areas," said Zhao Xijun, vice director of the School of Finance with the Renmin University of China.
Too much of China's economic growth had been driven by trade and investment which had increasing negative effects, said Zhao.
China saw a 31.3 percent growth in urban fixed-asset investment in the first half of the year. This is the highest in the past three years.
The government would continue to rein in investment and credit and tighten controls on the real estate sector, said officials.
(Xinghua News Agency December 8, 2006)