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)
