China to Further Expand Domestic Demands: Premier

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Last updated at: (Beijing Time) Wednesday, March 05, 2003

China to Further Expand Domestic Demands: Premier

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Chinese Premier Zhu Rongji called for continuing to expand domestic demand and achieve a steady and rapid economic growth this year, when he delivered the Report on the Work of the Government at the opening of the First Session of the Tenth National People's Congress Wednesday.

Maintaining the good momentum of economic growth is the basis for success in all fields of our work, the report says, adding, "Based on our overall analysis of the situation at home and abroad, we set the target for 2003 economic growth at around seven percent. This growth rate is both necessary and achievable through hard work."

"It is imperative that we pay adequate attention to raising the quality and efficiency of economic growth by readjusting and optimizing the economic structure. We should adhere to the policy of expanding domestic demand, continue to implement the proactive fiscal policy and prudent monetary policy, and ensure a double-pull effect on economic growth from both consumption demand and investment demand," the report says.

First of all, the government should strive to expand consumption demand. Given the current situation, this is more important than greater investment demand. We should continue to increase the income of urban and rural residents, especially those with low income, and work hard to raise the living standards of the population. "We should do everything possible to increase farmers' income and lighten their burden," the report says.

The government should effectively solve the problems the needy face in work and livelihood. The original plan to raise the salaries of government employees as well as retirees' pensions in the second half of last year was postponed in order to first solve the problems of the urban poor and to harmonize relationships among the interests of all quarters. This measure, however, will take effect this year. the government should continue to improve the consumption climate by improving relevant policies and expanding areas of consumer spending, according to the report.

A relatively fast increase in investment should be maintained. Based on an overall consideration of various factors, we plan to issue 140 billion yuan of long-term construction treasury bonds in 2003. The government should redirect the use of funds to be raised from treasury bonds as follows:

-- Priority should be given to ongoing projects and projects which are near completion, and to a selected number of new projects which are wholly necessary.

-- More support should be given to development of the western region, projects to improve production and living conditions in rural areas, technological transformation of enterprises, improvement of the ecological environment, and undertakings in science, education, culture and health care.

The government should broaden the channels for investment from society and for enterprise financing and direct investment funds from society to industries and development projects encouraged by the state.

The government should resolutely guard against redundant low-level development. In some localities, real estate investment is expanding too rapidly and too many luxury homes are being built. "We must heighten our vigilance against risks and potential losses from blind development," the report stresses.

While continuing to watch out for and defuse financial risks, the government should generate more financial resources to support economic development. Banks must give priority to extending matching loans to projects financed by treasury bonds, lend more money to enterprises that are profitable and trustworthy and have a ready market for their products, provide more credit to support agriculture, the rural economy, small and medium-sized enterprises and the service industry, and standardize and increase consumer credit.

The government should improve banking services, tighten financial regulation, and develop securities, insurance and money markets in accordance with established standards.

The government should conscientiously handle fiscal and taxation work and vigorously increase revenue and cut expenditures. By strengthening tax collection and management according to law and cracking down on all forms of tax evasion and tax fraud, the government will ensure that all taxes due are collected without exception.

Financial departments at all levels should arrange their expenditures so that funding for key items is ensured. They must first pay wages and salaries on time and in full, continue to increase their social security contribution, increase spending on agriculture, compulsory education and health care in rural areas, and increase transfer payments to the country's central and western regions and areas in difficulties, according to the report.

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