"Deflation still lingers, although we have achieved success to a certain degree," said Zeng Peiyan, minister of the State Development Planning Commission, during a press conference at the ongoing Fourth Session of the Ninth National People's Congress.

Last year, China saw its gross domestic product (GDP) rise by 8 per cent, ending a straight seven-year downward GDP increase since 1993, according to the report Zeng delivered on Tuesday.

"The national economy showed healthy growth last year, but the foundation for sustainable economic growth has not been consolidated," Zeng said.

Setbacks, such as low revenue increases for villagers and restrictions on private and collective investment, have dampened domestic consumption, he added.

To establish a better investment environment, Zeng pledged to clear up unreasonable regulations restraining investment from non-State businesses to create a fair environment for them.

At the same time, the issuance of 150 billion yuan (US$18.1 billion) in treasury bonds is needed this year to expand domestic demand, Zeng said.

"It is the right time to issue the bonds, because the abundant commodity supply and relatively low consumer prices will work to prevent inflation," Zeng noted.

China's current deficit and funds in outstanding treasury bonds are much lower than the internationally recognized level, he said.

Zeng said treasury bonds will be spent in ongoing construction projects and gigantic infrastructure undertakings for the western development strategy, including the south-to-north water diversion project, the west-to-east power transmission project and the west-to-east gas transmission project.

This year, 12 western development projects will kick off, whose combined investment totals 300 billion yuan (US$36.3 billion).

Zeng said the large-scale infrastructure construction will provide jobs for villagers, increase their incomes and consequently help trigger rising domestic demand.

(China Daily 03/08/2001)