It is an important function of the government to strengthen and improve macro-control, promote a sustained, rapid and coordinated development of the economy and create a good macrocosmic environment for enterprise development. Since last year, initial results have been achieved in the series of macroeconomic-control measures taken by the government and a major economic fluctuation has been avoided. At the "2004 Chinese Enterprises Summit Meeting", held today in Beijing. Ma Kai, minister of the National Commission in charge of Development and Reform, indicated this way in his speech.

Initial results in macro-control has avoided a major economic fluctuation

Ma Kai said that guaranteeing the steady operation of the ship of the national economy to ensure no major jolting and ups and downs is an important responsibility of the government as well as a necessary external environment for the sound development of enterprises. Through the practice in controlling serious inflation and curbing the trend of currency deflation, the Chinese government has gained increasingly rich experience in macroeconomic control, and in practice constantly strengthened the macro-control system suited to the requirement of the socialist market economy.

He said that the macro-control measure begun last year was adopted by the government to deal with the strained relationship between the supply and demand of food, with the expansion of fixed asset investment, the unplanned expansion of some industries and other unstable and unsound factors, the government deals with different things in different ways, retains some projects while abandoning other projects, has its eyes on long-term goals, tackles the problem by looking into both the root cause and symptoms, and exercises timely and effective controls over economic operation mainly by the use of economic and legal means, supplemented by necessary administrative measures, thus easing outstanding contradictions and problems in economic operations and achieving preliminary results. Currently, the national economy continues to maintain a stable and fairly rapid development momentum. History will prove that the present macro-control has avoided a major economic fluctuation, this measure has played a good guaranteeing role in the further development of enterprises.

Economic means used and combined measure taken for macroeconomic control

In replying to external comments that the current macro-control measures are mainly administrative means, Ma Kai said that the important basis of those sticking to this view is: they hold that we do not employ the means of interest rate which is, however, only one kind of economic means, while at the very beginning of macro-control this time, the Chinese government stressed the need to use mainly economic and legal means, supplemented by necessary administrative measures, so this can be called "combined measures":

In regard to monetary policy, to deal with the oversupply of money in circulation begun in April last year, the People's Bank of China adopted the means of issuing bonds of the central bank, continuously offsetting 300 billion yuan worth of money, that is an economic means. From September last year to April this year, the central bank twice adjusted the rate of banking reserves, playing a positive role in reducing the excessive money in circulation. In terms of interest rate, the central bank also decided to expand the floating range of benchmark interest rate, for state-owned commercial banks and shareholding banks, the interest rate on past loans was allowed to float only 30 percent and now can float 70 percent; for credit cooperatives, the floating rate could reach 100 percent, thus expanding the flexibility of interest rates. In reality, now the interest rate on loans in many enterprises has not really floated to the possible floating range, so there is still room for floating.

In regard to financial policy, the central government strengthens weak links while curtailing the unhealthy growth of some overheated industries that are growing too fast. Precisely because of this effort, financial revenue has been growing fairly rapidly, and a considerable portion of the newly increased income is used mainly in strengthening weak links, including support for agriculture, culture, public health and education undertakings, thus playing a very satisfactory role.

With regard to solving the problem of consecutive years of decline in food production, the government does not adopt simplified administrative measures to order farmers only to grow food crops and not to plant vegetables and fruit and engage in raising fish. On the one hand, the central government adopts measures to exempt or reduce agricultural tax and special farm product tax, it also adopts measures to give direct subsidies to farmers and subsidies to food crops growers, helping grain growers to increase incomes, what's more, the central government institutes the minimum purchasing price system, if it is lower than this minimal purchasing price, the central government will assign some state-owned enterprises to purchase food on the market so as to boost price, this is also an economic-control means.

In regard to control on the too rapid growth of fixed asset investment, the central government does not resort to a simplified adoption of the method of closing down enterprises, suspending their production, merging them with other enterprises, or changing their lines of production, instead, it adopts the measure of appropriately increasing the proportion of investment enterprises' own capital funds, thus playing a positive role in controlling unplanned investment.

Ma Kai said some administrative means are necessary, because, of the unsound and unstable factors generated in the new round of economic development, or of the partially heated factors, some are resulted from enterprises' business actions, and a considerable portion of the blind investment is caused by the government's unreasonable interference. Some mistaken and blind areas emerged in enterprise management need to be resolved through market regulation, market competition and legal restriction. However, problems of one kind or another resulting from government actions need to be solved by the help of administrative means, this is necessary as well as in line with international practice.

Further implementing various macro-control measures

In his address at the opening ceremony Vice-Premier Zeng Peiyan affirmed the results of the present macroeconomic control, he also reminded us of the need to soberly notice that the result of macro-control is only of a preliminary and phased nature. We will further implement various macroeconomic control measures, stabilize policies, keep calm observation, consolidate achievements, prevent reversals, put the focus of our work in accelerating structural adjustment, deepening restructuring and transforming the mode of economic growth; we should pay more attention to strengthening economic and social weak links, to expanding consumption demands, to improving people's livelihood, and to promoting a sustained, rapid, balanced and sound development of the national economic and all-round social progress through reforming and solving the problems of deep-seated systems and mechanisms that restrain economic development.

Ma Kai also mentioned that in the future, the government would make overall planning for the four major macro-control objectives��economic growth, employment, price and international balance of payments; in light of actual conditions, it would properly grasp the orientation, strength and focus of macroeconomic control in different periods, constantly enrich the connotations of macro-control, enhance the prediction, effectiveness and scientific nature of macroeconomic control, continually raise macro-control level, and strive to create a favorable macrocosmic environment for enterprise development.

By People's Daily Online