China's overall economic development is in a very good shape, with a double-digit growth atteining for consecutive years but it has encountered an over-speedy investment at times, excessive loans, and a bloated trade surplus. Then, how China beefs up and improves its macro-economic control and how its economy develops faster and better still. To answer these questions, People Daily reporters Li Fangfang and Zhang Lili had an interview with Han Yongwen, secretary general of the State Development and Planning Commission under the State Council, or the central government. The detailed account of the interview runs as follows:

Q. What were problems existing in China's economic development last year?

A. China's economic development in 2006 was not bad on the whole, but in the first quarter or first half of last year, there were an over-speedy investment, the release of excessive credit and a bloated trade surplus, which had been termed the "three excessivenesses". To cope with these problems in the country's economic performance, the central government resorted to some macro-control measures and scored marked results. Some protruding contradictions and problems, nevertheless, are still around, and those problems relevant to the "three excessivenesses" will possibly rebound.

These are evident mainly in two aspects: First, a trend for extension of a trade surplus prevails and, second, pressures from the rebounding of fix-assets investment still exist. Preliminary forecasts show the investment of fix-assets investment from the entire society will increase by somewhat 24 percent in 2006, quit a distance from the anticipated target. Some renewed impetuosity will be shown owing to an excessive surplus in foreign trade and easier accesses to loans by localities and enterprises.

The issue of overriding importance is how to carry out the relevant policies issued by central authorities. In the meantime, some changes that may crop up in economic performance should be monitored, tracked and followed, and policy measures adjusted and further improved timely.

Q. What is the trend with the monetary policy this year?

A. This year, China will go on implementing its stable, proactive monetary policies: First, cutting down on financial deficits; second, appropriately reducing the scale of the long-term construction bonds to be issued by the state and, third, optimizing the structure of the financial expenditure. To continue to implement the proactive monetary policy, it is imperative to further control the excessive extension of the credit so as to enable the credit size to increase rationally. Moreover, it imperative to further optimize the credit structure by providing more credit to those industries inspired by the state, small and medium-size enterprises, and new and high-tech firms. And reins will be imposed upon those industries with excessive energy consumption. Meanwhile, the process for interest-rate to be market-oriented will be speeded, a mechanism with respect to Renminbi (RMB) interest-rate changes further improved so that elasticity or flexibility of its exchange rate strengthened. Furthermore, stock market should be further standardized, direct financing expanded and more saving deposits of residents attracted and channeled directly to money market, so less funds scattereded in society at large would enter into the banking systems and the pressure on them will thus be alleviated.

Q. Expanding residents' consumption constitutes one of the top tasks defined by the Central Economic Work Conference for this year. How is the current situation with the consumption of residents, and what additional measures the Chinese government is expected to take for spurring consumption?

A. China has had an average yearly increase of over 12 percent for three consecutive years in its consumption sector, and the increase speed is not slow. The principal problem in the current consumption growth is irrationality in its consumption structure. The main phenomena are as follows. First, rural villagers and low-income urbanites have a relatively-low consumption level with a resultant weak consumption capability. Second, the ratio of residents' service consumption is relatively low. Third, with a declining consumption ratio at present, the ratio of investment is relatively high, and the crux of matter is to lower the excessive-high investment ratio. Fourth, the factors negatively affecting the further growth of consumption are also ascribed to the restriction of other issues in the setup and mechanism of other spheres.

To increase the consumption capability of residents and particularly to raise the income level of peasant farmers and urban low-income earners, represent one of the leading policy measures to spur consumption. Among other measures, the introduction of old-age pension and the providing of Medicare and Medicaid and other social security services should be stepped up, and more input added to the basic, cardinal education and public sanitary and health work. More affordable housing should be made available and problems with home buying should be resolved for low-income earners. And some new consumption "hot spots' should be nurtured and the consumption environment be further improved, and the construction of a circulation network between urban and rural areas and markets should be hastened.

Q. Home buying is the top and no. one "headache" problem for ordinary people, and what are prevailing problems in real estate market and what regulation measures the state has prepared to take to tackle these problems?

A. Initial successes have been scored in real state market, and there are still some thorny problems around. First, housing price is still somewhat higher with an apparent marked price increase range in some cities. Second, the housing guaranteeing system remains incomplete. Third, a market supply setup is also incomplete and the bulk status of lower-price housing and other ordinary apartments has yet to be established in China's commodity housing market. Fourth, the means of regulating the housing property market are also incomplete. Fifth, Property market order needs to be standardized. The government's stepped-up effort to regulate the property market is manifested in the ensuring four aspects.

First, the existing regulating policies should be stabilized, the supplementary policies be improved and efforts beefed up for implementation. Second, Some benign changes have cropped up at the present property market, which still needs a process for these regulating policies for adaptation and adjustment. Third, accelerated efforts are required to deepen the housing reform both in towns and cities, improve housing guaranteeing system, define the government responsibility in this regard and increase the supply of housing funds. Four, the policy promotion should be beefed up to guide market consumption, and the supervision and guidance of media publicity over the real state market be reinforced.

Q. On the issue of "Agriculture, farmers and rural areas", what new measures central authorities have worked out on the basis of benefiting farmers, and how can the "giving more and taking less" policy be ensured?

This year, the CPC Central Committee and the State Council have again set forth an explicit demand for a new increased input in agriculture. First, the investment for agriculture, farmers and rural areas should be stepped up, and persistent efforts should be shifted to infrastructure facilities construction and social undertakings in rural areas. Second, the growth of modern agriculture should be boosted, all-out efforts made to improve farmland irrigation works, to set up bases for production of cereals, cotton and vegetable oil, and input more in the spheres of agro-sciences and basic researches in agriculture. Efforts will also be kept up to develop the epidemic control system of livestock, poultry and aquatics and leading firms relating to the agro-business. Third, Rural production and living conditions should keep improving, and more allocations granted to develop bio-gas production, upgrade existing road conditions and rural power grids, and support industrial and service (or tertiary) businesses and accelerate the transfer of surplus rural labor power. Fourth, efforts should be hastened to upgrade conditions for rural schools and promote the balanced growth of compulsory education in both urban and rural areas, enlarge the scope of the new-type rural cooperative medical service on a trial, experimental basis.

By People's Daily Online