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Exclusive: Experts analyze main problems in China's economy |
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16:48, July 02, 2009 |
How to improve China's economy
People's Daily recently gathered economic experts' opinions on China's economy to help point out its main problems.
The economic growth rate is relatively low. One explanation is that market demand still depends on foreign economies, but China's major trade partners' economic situations are gloomy, leading to a significantly reduced market demand. The future of foreign trade is unclear, thus the domestic demand must be boosted to compensate.
However, the process of boosting domestic demand is fragile.
Effectively funding an economic stimulus package is the primary problem that local governments are facing. Investment in the manufacturing industry is still lower than normal, and it is difficult to completely transform a production capacity designed to satisfy export demand into one that can satisfy the domestic market. The measure of boosting private investments with government investment has shown no obvious results, and the drive to increase private investment is weak.
The motivation for structural adjustment is also weak. In particular, the internal drive to transform and upgrade the industrial structure is not strong enough. In east coast areas, structural adjustment was forced by the impact of the financial crisis, and at present, it is a long-term adjustment, instead of an adjustment for the current period.
The gap between excessive production and insufficient market demand has widened. The sales of industrial products continue to decline while stockpiles continue to increase. Business revenues and net profits have decreased remarkably. Some industries' losses are extremely severe due to their excessive production capacity while the prices of their products continue to drop.
Invalid injections of capital continue to increase. In particular, the injection of credit has structural problems, and may impose restrictions on future economic growth: the financial environment for small and medium enterprises has not improved; the proportion of credit available for consumers is relatively low; some funds have not been invested in the real economy, decreasing credit support for production and business operation.
By People's Daily Online
http://paper.people.com.cn/rmrb/html/2009-07/02/node_1928.htm
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