The Chinese Premier Wen Jiabao said at the "two sessions" of 2004 that the Chinese economy was at a crossroad. New contradictions and problems such as reduction of grain production, price rise had occurred amid development.

The Chinese economy has withstood above tests and the macro control has seen preliminary effects over the past year. Premier Wen will be able to feel consoled when he reports government works to representatives at the "two sessions" to be opened in this March.

However the burden on the Premier Wen's shoulder is still heavy though achievements are made: China is soon to open the market completely after accession to the WTO. 2005 is the last year of China's 10th "five year plan", so tones for the 11th "five year plan" shall be set. 2005 is also a crucial year for maintaining the robust development trend.

The Chinese economy is still at an important crossroad. A lot of profound contradictions and problems are still awaiting solutions. How is China to resolve these problems? The representatives to the "two sessions" are expected to have heated discussions on this topic.

Historical experience has shown reform is the sole solution to problems. As experts point out this year is a year of reform for Chinese economy.

Problems exposed in the macro economy of China, for instance, blind expansion of investment, lack of resources, and low efficiency are all linked with systematic and institutional flaws. As senior officials of the Chinese government said, pushing forward the economic system reform serves the goal to put up a system capable of guaranteeing sustainable development; reform should be deepened in the course of strengthening macro control. Obstacles for healthy development of economy shall be removed through deepening of reform.

"Macro control" has been the key term to interpret the Chinese economy last year. Reform, however, is the real theme. China has launched reform of investment system at the same time it curbs the too rapid growth in fixed assets investment. In order to guarantee increase of grain production and income rise, China has given peasants direct subsidiary and further improved reform of tax and fees. Other reforms on finance, tax system, SOEs and administrative approval system are all in progress.

The central economic conference held not long ago has set tones for the Chinese economy this year. That is to strengthen and improve macro control; lay emphasis on reform and opening-up; speed up adjustment to the economic structure; transform the economic growth patter, better make use of the opportunity to realize all-round, coordinated and sustainable development of economy and society.

Under such circumstances, China has made adjustments to the macro economic policy this year. The finance policy has switched from active to stable; monetary policy reform is about to come. But many measures still need discussion from all walks of life in order to eliminate systematic and institutional obstacles that may cause sharp rise and fall of economy.

Reform has accompanied economic development in China during the past 20 years. But reform has become more and more arduous as time goes by. Reform of finance, SOEs and reform of the government are all tough tasks. Whether China can make breakthrough in solving the problems is concerned with healthy development of the Chinese economy.

Will proper solutions be found in the year of reform? Representatives and delegates to the forthcoming "two sessions" will come up with ideas and offer advice at their gathering in Beijing in March.

By People's Daily Online