- Keeping price rises within a reasonable range. The CPI increase should stay at around 4.8 percent. The main factors taken into consideration in setting this goal are as follows. Price hikes last year will have a carry-over effect on prices this year. Domestic prices for non-staple agricultural products and factors of production such as labor, land and resources are on the increase. Mounting international prices for grain, soybeans, petroleum, iron ore and other primary products have had a big impact on the domestic market. In addition to other factors contributing to price rises, the above considerations make it unrealistic to set the target for CPI growth too low. On the other hand, we cannot set the target too high if we are to prevent structural price rises from leading to marked inflation, ensure that the basic needs of the people, particularly those of low-income people, can still be met, and maintain stability in the market and in society. Furthermore, the government is following a prudent fiscal policy and a tight monetary policy, and continuing to work to curb the excessive growth of fixed asset investment and improve the balance of payments, creating an excellent macro environment for preventing the overall price level from rising too fast. We have enjoyed years of bumper harvests and domestic supply and demand of major farm products have been basically well balanced. As measures are implemented to support hog production, oilseed cultivation and the dairy industry, supply should increase even more in these areas. Government revenue has been growing substantially year on year and the country has ample foreign exchange reserves. This has enabled us to rely on domestic reserves and an appropriate amount of imports as needed to ensure adequate market supply. All the above have put us in a favorable position to avoid marked inflation this year.
- Improving the balance of payments. The rapid growth in the trade surplus should weaken to some degree and China's external investment should expand steadily. The current international environment should remain favorable overall and domestic enterprises and their products are becoming more competitive, so exports should continue to grow at an appropriate pace. In addition, as policies limiting the export of resource products and products whose manufacture is energy intensive and highly polluting and policies encouraging imports and trade in services begin to take hold, the volume of imports should appropriately increase, the import and export mix should improve and the trade imbalance should ease.
III. Major Tasks and Measures for Economic and Social Development in 2008
This year is the first year for implementing the guidelines adopted at the Seventeenth Party Congress, the 30th anniversary of the reform and opening up policy and the year of the Beijing Olympic Games. It is also of special significance as a year that comes at the midpoint of the Eleventh Five-Year Plan for National Economic and Social Development. In order to smoothly attain the targets for economic and social development, we must take all factors into consideration, make our priorities clear and focus on the following eight areas.
1. We will improve and implement macroeconomic regulatory policies to maintain the good trend of steady and fast economic development.
Our primary task in macroeconomic economic regulation is to prevent rapid economic growth from becoming overheated and structural price rises from turning into marked inflation. We must work for steady economic development while giving top priority to realizing sound development. We must carefully review regulatory policy measures and adjust them as needed to address conspicuous problems and potential risks in economic development by determining the appropriate orientation, intensity and pace of regulation, taking into account both long-term and short-term needs and addressing both the symptoms and root causes of problems to build on the results of macroeconomic regulation.
