The central government's decision to adjust its investment
priorities will help boost domestic consumption and lead to a more
balanced growth for the nation, economists said.
"China's fiscal policy for 2008, despite still being described
as prudent, has a major change in terms of how the central
government will allocate its revenues," Cao Yuanzheng, chief
economist of Bank of China International, said. "The policy's
emphasis on public services, social security and rural development
may help grow the nation's consumption."
China's fiscal policy for 2008 will feature increased spending
to improve people's livelihoods and boost economic and social
development in underdeveloped areas, said Ma Kai, minister of the National Development
and Reform Commission (NDRC), at a meeting held over the
weekend.
The NDRC, the nation's top economic planner, elaborated its plan
for the nation's economic work in 2008 to top officials from
central and provincial governments during the meeting. The messages
conveyed are seen as a detailed interpretation of the policies
issued at the Central Economic Work Conference held last week.
Ma said a large proportion of the government's budget in 2008
would be mainly used to boost the development of rural regions and
the western areas. Meanwhile, the central government will also
spend more on education, energy-saving projects, and the social
welfare system, among others.
"Such moves will not only narrow the wealth gap but also help
boost domestic consumption," Zhuang Jian, a senior economist with
the Asian Development Bank, said.
Over the years, China has relied heavily on investment and
exports as the main engines of its economic growth. China now has
one of the world's highest saving rates, which analysts said was
largely due to the nation's inadequate investment on its education
and social welfare systems.
Over the years, the government has been boosting investment in
education, social security systems as well as public housing as
part of its efforts to increase domestic consumption.
According to Ma, the central government will reduce the issuance
of long-term construction bonds in 2008 as part of its fiscal
policy. At the same time, the central government's overall
investment budget will increase slightly compared with 2007.
(China Daily December 11, 2007)
