In his presentation at China Forum for Economic Growth, Li Deshui, director of the National Bureau of Statistics, gave his in-depth analysis on China's economy and macro-control policy which have widely aroused concern both home and abroad.

Far-reaching achievements of macro-control

The year of 2004 has witnessed the fast growth of China's macro-economy, moderate and controllable price hike, better employment, and healthy international balance of payments.

This round of macro-control endeavor, Li stressed, was justified much more by something far-reaching than these indicators. It is more important that the central government has got its idea of scientific development and neo-industrialization across to local levels and various departments.

The emergence of economic problems since last year have sparkled people's reflection. The reality has told us the importance of grain production and the protection of arable land, as well as the deadlock of unsustainable economic growth at the cost of excessive consumption of resources. All of these have shaken the mindset of the whole society.

Facts speak for themselves that only the combination of the zest for development and a scientific attitude guarantees the development. History, Li believes, will prove that on the country's long march toward the modernization, this macro-control serves as a dose of sobriety, an adjustment of its pace of running ahead and a fuelling. It is in this sense that the macro-control has laid a significant and profound cornerstone for the future.

Fundamentally, it is an important measure to consolidate and improve the macro-control to build up and implement the principle of scientific development. Without a scientific attitude, the will for development will get nothing but half the result with twice efforts or even hardly work for long.

An organic combination with deepening reform

Li recognizes the reoccurrences of blind expansion of investment and one-sided pursuit of the speed of growth in the country's economic development. But we have kept making efforts on eliminating this chronic problem, he noted.

Li attributed this to the loopholes in systems and laws and the rough development model. He thinks economic adjustment is not enough to solve the problems. The real cure, he asserted, is the reform which is expected to repair the flaws in the systems and mechanisms and have a long term regime in place. Otherwise, there is always a looming danger of a relapse.

It is out of this consideration that the central government has pushed various major reforms forward in this macro control campaign. Macro-control measures go side by side with systematic reforms from the outset.

A typical example can be found in the handling of the agriculture, especially the grain production and farmers' income. Fiscal policies are devised to extend more subsidies to farmers while reform on annulling agricultural taxes is launched on the basis of consolidating the tax-for-fee reform in rural areas. In addition, pilot projects for the reform of rural credit cooperatives are extended to more areas, which secures a financial support for agricultural development. When a new situation of the demand and supply of grain took place, the reform on the system of grain circulation was launched at the end of May.

In mid-July, the State Council announced its decision of the overhaul of the investment system. This happened at the crucial time when the country was trying to curb the frenzy of fixed assets investment.

Both of the two reforms aim to give a full play to the market in allocating the resources. It needs incredible courage to launch such reforms when economic adjustment is under way. This, Li said proudly, has proved the art of leadership, the competence and confidence of the Chinese government in controlling the socialist market economy.

Not deflation

Some regard the macro-control as a de facto deflation. Li disagreed. He said the macro-control, as an integral part of the socialist market economy, serves to erase the fluctuations of the economic operation so that the economy grows in a steady and harmonious way.

Macro-control is one of regular tasks of the government. Market economy means the market playing a key role in allocating resources. However, macro-control is necessary to avoid the intrinsic flaws of the market.

This is especially true for China which is experiencing the transition of the system. A solo by the market is far from enough in an economy where the market is not mature and the development of various regions is unbalanced.

Ups and downs in a certain period are hardly avoidable in an economic cycle. However, the duration of the growth and the range of the fluctuation depend not only on the market, but also on how people view the rules and how the government controls the economy.

So macro-control goes side by side with the whole process of the economic development. But the extent, direction and ways vary in different situations.

China fought against inflation for five years from 1993 to 1997. That was followed by another five year struggle against deflation from 1998 to 2002.

In 2003 the country's economy began to gear up in a new fast track. But the slide of grain production, overheating investment and arable land abuse became prominent problems.

This round of macro-control, Li concluded, is well defined and designed according to the actual situation.

By People's Daily Online