The country witnessed a year of rapid economic expansion in 2004. Demand, from within the country and abroad, saw a remarkable increase while the economy ran far more efficiently.

However, problems also emerged. Investment in fixed assets reached an all-time high, bank credit rose drastically, the shortage of coal, electricity and oil became more dramatic and the consumer price picked up its momentum.

To prevent such extreme economic ups and downs, the central government resorted to a series of moves to ensure steady and sustainable growth.

Land policy is the key to the latest round of macro controls.

The State Council released an urgent notice forbidding the planting of trees and other non-crop plants on arable land on March 20.

Barely one month later, it released another document to regulate the land market and the changing hands of land. This document suspended any decision to turn agricultural land into land of other uses across the nation. Only the State Council has the power to approve such a transformation, for truly urgent projects.

Coupled with other measures to curb arable land abuse, these policies had far-reaching effects.

To further the achievement, protect arable land and establish a mechanism to strictly regulate land use, the State Council issued a decision on October 21, stressing the importance and specific methods of land use regulation.

On the same day, the Ministry of Land and Resources and the Ministry of Agriculture jointly released a document in an attempt to iron out arable land use malpractice.

The Ministry of Land and Resources then published three further documents in early November, governing land use in construction projects and development zones.

As a result, the over-exploitation of land by development zones has been checked. By the end of October, 24,000 square kilometers of land had been recovered, two thirds of the 35,000 square kilometers that were occupied by various development zones.

Among the central government's efforts to control the economy, policies tackling long-existing problems in rural areas, agriculture and the lives of farmers were one of the hot areas.

On February 8, the Central Committee of the Communist Party of China and the State Council issued their "No 1 document," which stressed the need to promote the growth of farmers' incomes.

This was the first time in 18 years that the central authorities listed farmers' incomes in their No 1 document, which indicates the central authorities' determination to make the issues of agriculture, rural areas and farmers a priority.

It was also the first time since 1949 that the central authorities issued a document specifically designed to improve the incomes of farmers.

On behalf of the central government, Premier Wen Jiabao promised in his work report to the annual session of the National People's Congress in March that agricultural tax would be cut by 1 percentage point every year with the tax written off completely within five years.

The State Council also furthered reform on the grain circulation system in May.

By opening up the procurement of grain in grain-producing areas and offering direct subsidies to grain growers, the central government encouraged farmers to stick to planting grains, protected the interests of farmers and customers and established an open and ordered grain market countrywide.

These policies achieved significant progress. Direct subsidies for grain growers reached 11.2 billion yuan (US$1.35 billion) last year, making up 96 per cent of total subsidies and benefiting nearly 600 million farmers.

The continual shrinkage of the summer grain crop over the last four years was halted. And the target grain output of 455 billion kilograms for 2004 was easily accomplished.

Last year, the government's monetary policy served to further reform of the interest rate.

The People's Bank of China, the central bank, launched a system on April 25, which required different deposit reserves for banks with different amounts of capital.

This system will help financial institutions better carry out monetary policies, stimulate them to improve their corporate governance and improve their capital.

Meanwhile, the central bank could also employ this system to control money supply as well as lower risks to the whole financial sector.

On October 29, the central bank raised the benchmark rate for one-year deposits and loans by 0.27 percentage points and removed the ceiling on financial institutions' credit.

The deregulation of interest rates, both for deposits and credit, is an important step towards making China's interest rate totally market orientated.

In industry, the authorities focused mainly on reining in over-heated investment in 2004.

In April, the State Council, the National Development and Reform Commission, the People's Bank of China and the China Banking Regulatory Commission issued a series of documents to slow down investment in iron and steel, cement, electrolytic aluminum and property.

The National Development and Reform Commission also set down a policy guiding the development of the automobile industry on June 1.

This policy will promote the restructuring of the automobile industry, improve the research and development capabilities of automakers, establish the sales and service network of domestic manufacturers and prepare China's automakers for market competition from both home and abroad.

Also in June, the State Council urged local governments to better control the demolition of old housing and the resettlement of residents.

By reducing the number of old houses being demolished, the authorities will be able to cut demand for property created by resettlement. This way, the number of new property projects are expected to be reduced, the sky-rocketing growth of development would be slowed and the supply and demand of property would become more balanced, leading to a drop in property prices.

(China Daily January 10, 2005)