Lopsided pursuit of heavy industry poses danger to Chinese economy

Editor's note: The economic growth dominated by heavy industries will endanger China's safety. This is a warning for the rapid economic development in China given by Wu Jinglian, an eminent economist.

As a scholar, Wu's every point of view has roused echoes in China in the past few years. This viewpoint is believed to be unexceptional.

To curb the overheatedness has always been the keyword in China's economy throughout the year. What makes the economy overheated is the excessive investment in heavy industries of iron and steel, building material, etc. Under such a background, Wu's article released at the yearend can be taken as a piece of beneficial advice to China's macro-control in 2004.

An article written by Wu Jinglian was published on the website of the Development Research Center of the State Council Nov 23. In the article named "pay attention to transition pattern for economic growth and prevent the trend of lopsided heavy industry" Wu calls on that "the tendency towards heavy industry" will incur energy crisis in China.

Traces tending to heavy industry appear in Chinese economy

Some distinctive features of tending to heavy industry have come to appear in China's economic growth pattern since the decision was made to take a new road of industrialization at the 5th plenary session of the 15th Central Committee.

At the "summit for CEO of China's growing enterprises", Liu Shijin, secretary general of the Development Research Center of the State Council gave a rosy description of "heavy industrialization". He thinks the rapid growth of Chinese economy is dominated by industries as real estate, automobile, infrastructure construction, and supported by iron and steel, nonferrous metals, building materials and chemical industry. China has entered a stage featuring a strong and sustainable development of heavy industrialization.

But Wu's viewpoint is just the opposite.

The economic growth dominated by "heavy industry" in China takes place at an inopportune moment, Wu says. Citing Shenzhen for example, Wu says, as a center of information Shenzhen has now to be engaged in automobile and chemical industry while Zhejiang with best-developed SMEs is also required to "switch to heavy industries ".

Pursuit for heavy industry is the root-cause of energy shortage

China's oil import has been approaching 100 million tons though now it's only in November. Facing extreme shortage of oil and electricity, the extensive growth pattern dominated by "heavy industry" will not be able to resolve for a long time the employment problem, and on the contrary, it will cause a nationwide energy consumption and exhaustion.

Wu says in his article that the Hoffman Theory, the 19th century theory that advocates extensive growth pattern doesn't cater to China's situation.

In Wu's eyes, even Zhejiang, a province featuring the SMEs, is now set on the road for heavy industry. "The resources have seen serious shortage there. Last year they began to limit usage of the power by switching off the electricity and now the machines stop for three days out of the four."

Prior to this, China's switch to the heavy industry has won a big uproar. But Wu pours cold water on them, for this is a result obtained by way of government regulation rather than the market regulation,

The fast expansion of heavy industry in last year has set ablaze China's economy. The overheated development of houses, automobile, infrastructure has caused the iron, nonferrous metal, building materials, machinery and chemical industry to follow, which has ultimately resulted in a shortage of electricity, coal and oil resources.

By People's Daily Online