Chinese economists expressed prudent optimism about the economy,
but warned of fixed asset investment rebound, increasing
inflationary pressure and structural hindrances, according to a
survey conducted by the National Bureau of
Statistics' Economic Prosperity Monitoring Center.
About 56 economists were surveyed in the first quarter of 2005
using questionnaires about the current economic situation and
future development, as well as seeking suggestions for future
macroeconomic policymaking and reform.
The results were published in the latest issue of Beijing-based
business magazine Caijing.
Eighty-six percent expressed "satisfaction" over the current
economic situation, up 16 percentage points on the same period last
year and the highest level in successive surveys. About 14 percent
chose "good," down 14 points on the fourth quarter last year.
They overwhelmingly said the economic situation had improved or
remained unchanged, and about 72 percent were basically satisfied
with current investment and consumption.
A quarter said they expected economic trends to "turn better" in
the next six months, 71 percent said they would "remain unchanged"
and the rest that they would "worsen." These results were similar
with that from the last quarter of 2004.
They felt optimistic about foreign direct investment, but
believed surging trends would ease due to macro-control measures
and a slowly growing world economy.
On trade surplus, one quarter said it would "increase," one half
said it would be "balanced" and the rest chose "reduce."
None characterized the economy as "overheating," but 39 percent
described it as "pro-heating." About 53 percent said it was
"normal," down 20 percentage points on the fourth quarter last
year. Eight percent said that it was "difficult to judge," up 6
percentage points.
Economists forecast prices would continue rising in the next six
months, but that inflationary pressure wouldn't worsen accordingly.
The number who said the consumer price index would rise in the next
six months increased 25 percent on the previous quarter. Those who
said it would "remain unchanged" and "lower" fell 12 and 13 percent
respectively.
Seventy-three percent of them said inflation is "not serious,"
23 percent "serious" and 4 percent "very serious."
They had mixed viewpoints on the domestic stock market; a third
each said it would be "up," "stable" and "down."
The previous survey had found a majority agreeing that interest
rate increases were the most effective monetary policy, and two
thirds this time expected a further rate hike.
Although the central bank raised interest rates and down
payments, about 52 percent believed house prices would rise in the
next six months, but those who said they would fall increased
slightly.
There was agreement that the renminbi's exchange rates against
major currencies were a little undervalued and that pressure of
renminbi appreciation posed a challenge for persistent growth.
Of 17 problem areas listed, economists said seven, including
energy supply, inflation, foreign debt and lack of proficient
laborers, had rapidly worsened compared with the same period last
year.
The other ten, including unemployment, agriculture, overheating
investment and income gap expansion, were thought to have eased to
some extent.
They said agriculture had significantly improved due to central
government policy, and unemployment from rapid economic growth,
while overinvestment had been curbed by effective
macro-controls.
A majority held positive attitudes toward the effects of
macro-controls in the past year, and were basically satisfied with
fiscal and monetary policies.
But they also said macro-controls should follow economic needs
instead of intervening too much, and that the central bank should
be given greater independence.
They recommended that government investment and speculative
demand in the real estate sector should be further curbed,
consumption stimulated and the service sector and rural public
utilities strengthened.
To ease energy pressure, they said the government should
implement measures to boost research into new energy sources.
They said the government should increase transparency of
administration procedures, restrict licensing powers and strengthen
supervision of government investment and expenditure.
They also urged for the acceleration of reform of state-owned
commercial banks and opening-up of the domestic financial market.
They asked government to broaden financing channels for small and
medium-sized enterprises, strengthen safety management of banks'
capital, and curb corruption in the financial sector.
They highlighted hidden troubles caused by fiscal deficits at
county- and township-level government.
As for taxes, they hoped reform would continue, and said tax
rates for domestic and foreign-funded enterprises should be
unified, and the role of personal income tax in narrowing the
income gap strengthened.
(China.org.cn by Tang Fuchun May 8, 2005)