Working on balancing economic growth
By Xin Zhiming (China Daily)
Updated: 2004-03-16 13:50

Premier Wen Jiabao's cautious optimism about the health of the economy shows the leadership's sober-mindedness on the mixed state of the national economy.

While last year witnessed rapid economic growth, "many deep-rooted problems in the economic structure remain unsolved," Wen said at Sunday's press conference after the conclusion of the annual National People's Congress session.

"The test is no less severe than the one posed by last year's SARS (severe acute respiratory syndrome) epidemic," the premier added.

Last year saw China's fastest gross domestic product (GDP) growth - 9.1 per cent year on year - since the 1997 Asian financial turmoil. And for the first time the per capita GDP exceeded US$1,000, marking a new stage in the country's development track.

But the premier is obviously more concerned with the economic structure imbalance than cheered by the remarkable GDP figure.

GDP used to be taken in the country as the de facto criterion for gauging economic development. But it does not reflect everything about the economy, let alone social development.

Clear knowledge of the real situation is essential for making policies that promote economic and social sustainability.

As the economy grows steadfastly, red-hot investment, excessive energy consumption, an "obvious trend of rising prices," plus decreased grain output and widening income and regional gaps overshadow the instant prosperity a rapidly-expanding GDP has brought.

From January to November last year, the fixed-asset investment in the steel industry, for example, doubled over 2002.

Thanks to the rapid economic growth, particularly investments, growth of the consumer price index (CPI) accelerated in the second half of last year, from below 1 per cent to 3.2 per cent in December, the highest since April 1997.

The National Bureau of Statistics predicts the inflation rate may reach around 3 per cent this year.

That could be a worrying sign, despite some economists' optimistic preclusion of an overheated economy. For a country that has been trapped in deflation in recent years, the rapid CPI uptrend since late last year merits caution.

It is worth noting that the premier defined the goal of the government's economic work this year as maintaining a "balanced, relatively-fast" economic growth. It presents a notable departure from the previous policy line of promoting "sustainable, fast and healthy" economic growth.

The change in wording will hopefully herald a shift of focus in the government's policy that will emphasize more the quality of the economy.

A "balanced" development mode, which is to narrow the chasm between the rich and poor and between the developed and less developed regions, is a must as the gap has bottlenecked the country's all-round development.

The ratio of rural residents' income and the disposable income of urban residents is 1:3.11. Taking into consideration the many welfare benefits urban residents enjoy, the gap might be even wider.

The income gap has impeded the expansion of domestic demand in the rural areas, jeopardizing the overall development of the national economy.

Premier Wen frankly admitted at the press conference that the issue of "countryside, agriculture, and farmer" is the most "thorny" to deal with.

We have no other choice but to formulate feasible policies to narrow the gap - for the sake of a sound economy and overall social development.