Hedged by the SARS (severe acute respiratory syndrome) epidemics and rising unemployment rate, the Chinese government is working hard to strike a balance between curbing excessive industrial investment while encouraging the growth of new economic sectors.
Ma Kai, minister in charge of the State Development and Reform Commission, told lawmakers Monday that high growth was needed to harness the rising unemployment rate exacerbated by SARS.
However, the emerging excessive investment in the steel, building materials, nonferrous metals, and automobile sectors, if untreated, would lead to economic overheating.
"The trend of excessive investments and wasteful duplication in construction is picking up," Ma said in a report on the year's economic developments and the government's work plan for the remaining year.
During the first six months of this year, production and investment in the steel and iron sectors grew by 21 percent and 130 percent respectively, following last year's rapid growth.
Meanwhile, in the automobile sector, small scale and weak independent development capabilities were real problems, and 70 of the 123 plants capable of producing whole vehicles manufactured less than 10,000 units each per year.
Ma also warned that banks were lending too much. Money lent by financial institutions in the first 7 months of this year has exceeded the total volume of last year, he said.
Under the current mechanism of lax supervision, more bad loans were almost inevitable.
However, the fast growth rate in consumption has been a boon for government officials and economists.
"Problems emerging in the course of development should be addressed with methods of further development," Ma Kai said.
He told lawmakers that the government would encourage the construction of residential apartments suitable for average urban dwellers, not just luxury villas for the new rich.
The government will further open the market of second-hand apartments and install a guarantee mechanism for apartment loans, he said.
Other major efforts in spurring the growth of consumption as listed by Ma include:
--New policies on automobile consumption to improve services for car buyers and drivers.
-- Installation of a universal telecom service fund for the spread of telecom services in China's vast rural areas;
-- Formulation and implementation of rejuvenation plans for the tourism and civil aviation sectors that were hurt by the SARS epidemic.
-- Encouraging the development of chain store retailing services and modern goods distribution system, and promoting on-line transactions.
China recorded a growth rate of 8.2 percent in the first half of this year with its GDP valued at 5005.3 billion yuan, Ma said.
(Xinhua News Agency August 26, 2003)
