China's top economic planner said the country is able to maintain the growth momentum, despite challenges from WTO entry and the global economic downturn(01/17/02)

2004-06-12 15:17

China's top economic planner said the country is able to maintain the growth momentum, despite challenges from WTO entry and the global economic downturn.
The economic growth in 2002 is expected to be around 7 per cent.

"We are capable of maintaining the current growth momentum,'' Zeng Peiyan, minister of the State Development Planning Commission, told a press conference held by the Information Office of the State Council.

"We will this year meet the growth target set by China's 10th Five-Year Plan,'' he said.

The 10th Five-Year Plan, which covers the period 2001-05, predicts that China's economy will grow by around 7 per cent over the course of the Plan.

Government statisticians estimate that China's gross domestic product (GDP) grew by 7.3 per cent in 2001.

Zeng said the government still needs to stimulate domestic demand, through government input into infrastructure and increasing the income of private individuals.

Zeng said China will this year continue to issue special treasury bonds to finance infrastructural construction.

The bulk of funds raised through special treasury bond flotations this year will be used in the country's western regions, he said.

Such bond issues have been a key part of the government's stimulus packages over the past four years.

Last year, 150 billion yuan (US$18 billion) worth of such bonds were floated, which represent a significant part of an estimated government deficit of about 300 billion yuan (US$36 billion), or 3 per cent of the GDP. Precise deficit figures will come out later this year.

"The deficit this year could be higher than last year's but the difference would not be great,'' he said. He refused to provide planned deficit figures for 2002, saying government departments are still working to finalize the budget, which is to be deliberated on by the National People's Congress, the parliament, in March.

There have been debates over the necessity of the bonds in the pump-priming programmes. Opponents doubt the merits of the debts, saying that expanding deficits could trigger inflation and cripple the government's ability to make macroeconomic adjustments in the future.

Zeng, however, said the central government is comfortable with the current deficit level.

He said the effects of the special treasury bonds were significant.

"The bonds financed infrastructural projects, which lead to increased production of enterprises. This, in turn, contributed to the government's rapid growing revenues,'' he said.

China's government revenues grew by about 22 per cent last year.

"Our policy of stimulating domestic demand is a very important factor in the increase of fiscal revenues,'' Zeng said.

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