Economic Growth Faces More Challenges

China is faced with more disadvantageous factors in its economic development this year. Such factors have manifested themselves in two aspects: the expansion of the domestic market has not yet found a firm footing, and uncertainty still exists in the prospect of world economic development, according to economic experts with the Development Research Center of the State Council.

Therefore, in their proposal to the government, they call for a combination of efforts in expanding the domestic market and finding new points of economic growth so as to achieve the best results.

China now sees a continuing drop in prices for farm produce, slower growth of farmers’ income, a poor rural market, increased difficulty in raising the income of urban low- and mid-income groups on the increased base of last year, and the service economy beginning to cool down. The effects of policies adopted last year including the collection of interest tax and the practice of insisting on the use of real names in saving deposit accounts have reached their limits. The real estate business has been less of a strong market influence since the latter half of 2000, with the growth of investment crippled. What’s more, the room for the distribution of national bonds has been reduced. All these aspects will, to a varying degree, check the expansion of the domestic market, the experts said.

To reduce the negative impact of these factors, they suggest the state accelerate the development of new economic growth points focusing on such industries as housing, automobiles, electronics, telecommunications, tourism, education and related industries with the aim to improve people’s living standards.

They also call for reform and reorganization of such sectors as telecommunications, power, railway and civil aviation to break monopoly and improve the efficiency as the basis for competition.

Such moves will help to enhance the vitality and competitive edge of China’s primary industries, they said.

Speaking of the sectors represented by the household electrical appliances industry where market competition is intense and the average profit level is low, the experts advocated merging of enterprises, so as to focus more efforts on the products of higher technological content and higher added value, as well as on improving the quality of service.

In addition, they urged the state to adopt car-price adjustment policy and support the business realignment to expand the market capacity and improve domestic auto manufacturers’ adaptability and competitiveness after China’s accession to the World Trade Organization.

(CIIC 03/26/2001)


In This Series

Experts Optimistic About Nation's 2001 Economic Situation

Will China's Economy Rebound?

Economic Targets for 2001 Outlined

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