Chinese Economy to Overcome Difficulties, Make New Strides
   2014-02-27 20:10:41    Xinhua      Web Editor: Wang

China's upcoming annual sessions of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) have drawn the attention of the world as a window on the country's political and economic development.

At a time when the global economy is struggling to recover and restructure, Chinese economists, deputies to the NPC and members of the CPPCC are confident China's economy will overcome difficulties and make new strides in 2014, a year that marks the beginning of comprehensively deepening reforms and opening-up.

They say this year's two sessions will lay a new blueprint for China's economic and social development and that the Chinese economy will succeed in both development and reform.

CRUCIAL PERIOD FOR ECONOMIC TRANSFORMATION

In the context of a complicated and volatile world market last year, the Chinese economy witnessed a two consecutive months of decline.

However, thanks to Chinese policymakers' strategy of making progress while maintaining stability, market confidence was obviously shored up from the beginning of the second half of 2013.

Economic growth finished at 7.7 percent last year, making a good start for China's socioeconomic development and laying a solid foundation for further progress in 2014.

In 2013, China's total imports and exports reached 4.16 trillion U.S. dollars as it overtook the United States as the world's largest trading nation.

A historic change also took place in the country's industrial structure, with the service sector exceeding secondary industry for the first time. Meanwhile, consumption overtook investment to become a driving force for economic growth.

In addition, the consumer price index (CPI), a main gauge of inflation, rose 2.6 percent year on year, far below the government's target of 3.5 percent. A total of 13 million new jobs were created, higher than the target of 9 million, with per capita net income of urban and rural residents remarkably increasing.

These achievements showed China had taken a "substantial" step in economic restructuring, said Jia Kang, director of the Institute for Fiscal Science Research under the Chinese Finance Ministry.

Jia, also a CPPCC member, said that, in the face of ever-changing world economic situations and downward pressure on the national economy, Chinese leaders' strategy of stabilizing growth, restructuring and promoting reforms helped the economy realize steady growth and play the role of "a stabilizer" for the global economy.

A meeting of the Political Bureau of the Communist Party of China (CPC)'s Central Committee was convened Monday to discuss the government work report to be submitted for deliberation at the annual NPC plenary session in early March.

During the meeting, Xi Jinping, general secretary of the CPC Central Committee, said China achieved better-than-expected results last year, despite experiencing more difficulties than expected.

China's development still faced complicated situations "with the coexistence of advantages and disadvantages," the meeting noted.

From an international perspective, the profound readjustment of the world economy has brought an unprecedented opportunity and challenge for the Chinese economy.

Last month, the International Monetary Fund (IMF) predicted 3.7 percent growth for the world economy in 2014, the first increase in its prediction in the past two years.

World Bank president Jim Yong Kim said the world economic growth, driven by emerging economies in the past five years, was expected to be boosted again by developed economies.

"The global economic crisis has not come to an end yet, but entered a new stage," said Li Yang, vice president of the Chinese Academy of Social Sciences (CASS).

Due to the U.S. Federal Reserve's decision to taper its quantitative easing monetary policy, emerging economies and developing countries were hit by a shortage of funds, said Li, who is also a NPC deputy, adding the Chinese economy would be affected by a resurfacing of some old structural problems.

At home, the Chinese economy is experiencing historic transformation from high-speed development to moderately rapid growth.

"The Chinese economy is currently in a period of 'dual conversion'," said Feng Fei, an analyst with the State Council's Development Research Center, referring to the transition in both growth momentum and comparative advantage.

SEEKING PROGRESS WHILE MAINTAINING STABILITY

The Chinese economy is also thwarted by some deep-rooted obstacles, including excess capacity in certain industries.

Liu Shucheng, an economist and CPPCC member, said that, in 2014, China should remove excess capacity in certain industries, prevent risks of local government debt, calm rocketing home prices in some cities, and reduce enterprises' production and operation costs.

In the meantime, he added, China should also maintain a moderate economic growth and prevent structural unemployment.

Statistics show, by the end of 2012, capacity utilization of only 70 percent was registered in such sectors as iron and steel, cement, electrolytic aluminum, plate glass and ships.P Li, the CASS vice president, said the problem of excess capacity was related to a GDP incentive mechanism decided by an irrational development strategy, which should be reformed fundamentally.

The risk of local government debt, estimated at more than 20 trillion dollars by the end of 2013, is also an obstacle hindering the Chinese economy.

Jia, the Finance Ministry official, said, in order to prevent systemic risks due to lack of capital, it was imperative to set up a mechanism of early warning and emergency response for debt risks.

"The Chinese economy is in a crucial, painful moment of transformation and structural readjustment," said Feng, the State Council analyst.

"In the new year, we will face a tough test and should stick to the policy of seeking progress while maintaining stability," he said.

REFORM, INNOVATION NEEDED FOR BREAKTHROUGH

Facing fierce competitions worldwide in new industries brought by the recovery of developed economies, the Chinese economy in transformation needs reform and innovation to make a new breakthrough.

"We should speed up reform and make a breakthrough in innovation to occupy the high ground in the revolution of new technologies so that the Chinese economy can take a quantum leap," said Sun Pishu, chairman of Inspur Group and a deputy to the National People's Congress.

The IMF and Asian Development Bank predict the Chinese economy will increase 7.5 percent and the World Bank puts the figure at 7.7 percent, indicating China's growth will continue to lead that of all important economies.

"As China is promoting urbanization, industrialization, informatization and agricultural modernization, there is no problem with the fundamental driving forces to boost its economic development," Feng said, highlighting the key issue for the Chinese economy is whether reform and innovation can form core competitiveness.

Participants at the CPC meeting Monday decided to strive for new breakthroughs in major areas of reform, construct an open economy, push forward "high-level" opening up and foster new world-class competitive edges, with the emphasis on restructuring the economic system.

Analysts say the decision made at the meeting determined the policy frame of the central government's economic work this year and the upcoming two sessions will turn plans into actions.

"Reform will become the theme of this year's economic work," Jia said, adding that reform measures would be carried out to promote development, adjust economic structures, transform the mode of economic growth and improve people's living standards.

The "engine" of this round of reform should be restructuring the economic system, according to Yang Weimin, vice head of the Office of the Central Leading Group on Finance and Economic Affairs, a key economic policymaking institution.

The fundamental issue in China was development, which faced a number of difficulties and risks, Yang said, indicating only accelerating economic reform could inject more dynamism into development.

China's top oil refiner Sinopec took a first step in reforming the country's inefficient and wasteful state-owned enterprises.

Sinopec announced on Feb. 19 that it would bring in social and private capital to jointly market and sell its oil products, the first opening up of the largely monopolized area.

The move was seen to echo the decision made at the third plenum of the 18th Communist Party of China Central Committee last November to give the market a decisive role in the economy, recognizing the private sector's indispensable role in fostering economic growth and job creation.

Other dramatic measures such as improving the budget management system, introducing a property law and establishing a unified rural-urban construction land market are expected to add more vitality to the Chinese economy.

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