China will stick to achieving a continuous and steady economic development with pro-active fiscal policies while speeding up reforms in the banking sector and capital market, senior officials have said.
Finance Minister Xiang Huaicheng and Governor of the People's Bank of China Dai Xianglong made the remarks at the 2001 China Development Forum yesterday.
Xiang said that although the Chinese economy is now experiencing an upward trend, there is still a lack of demand and the tendency for deflation has not been fundamentally corrected.
Xiang said that this year, the government will issue 100 billion yuan (US$12 billion) worth of treasury bonds to raise cash for ongoing construction projects.
More treasury bonds totalling 50 billion yuan (US$6 billion), will be issued to raise money for the development of the western regions.
The implementation of pro-active fiscal policies and the current budgetary deficits mean deficits will keep expanding.
Adopting such policies will not cause inflation, Xiang said.
The supply of products is sufficient and price is stable in China.
Xiang also pointed out that China's fiscal policies in the short term will be pro-active in nature.
"In two or three years, when the foundation of economic growth is more consolidated, the government will adjust its fiscal policies," said Xiang.
China's banking and capital market will continue with its reforms to back up the country's fiscal policy.
Governor Dai of the People's Bank of China said the state-owned commercial banks will be overhauled and restructured into joint stock commercial banks, with the state holding the majority share.
"In order to promote the reforms, the government will liberalize the interest rate step by step," Dai said.
The People's Bank of China will encourage moves to set up investment companies mainly to serve small and medium-sized enterprises, Dai said. More foreign banks will also be introduced to the Chinese market.
In the capital market, Dai said, more areas will be opened to foreign investment.
"The government is exploring the possibility of allowing domestic and overseas investors to buy non-performing assets from assets management companies and setting up foreign-funded western development banks," Dai said.
At the same time, restrictions on treasury bonds will be changed to make them more tradable and the issuing of corporate bonds will be encouraged, Dai said.
(China Daily 03/26/2001)
