China's attempt to balance its remarkable growth and capital
account must be done in harmony with its domestic social-economic
climate, officials and experts said.
However a complicated decision-making environment is proving to
be a challenge for the country's strategic thinkers.
Zhang Xiaoqiang, vice-minister of the National Development and
Reform Commission (NDRC), said at the Inaugural Annual Meeting of
the New Champions in Dalian that the country had paid great
attention to achieve a balance of its current account.
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"With the restructuring of international industries in a
globalized age, China has become a large manufacturing and
processing trade center and this situation will not change easily,"
Zhang said.
He said the country had almost US$1.4 trillion foreign reserves
by the end of July, mainly as a result of trade surpluses and
inflows of foreign investments.
In the first seven months, the nation booked trade surpluses of
US$136.82 billion, while foreign investors poured in US$36.93
billion.
Zhang said China had been trying to expand domestic consumption
to reduce reliance on foreign trade, and increase imports of goods
and services that the country needed.
The country has introduced measures like increasing wages of
employees, creating more jobs and providing social security to poor
people.
It also designed schemes to allow Chinese mainland companies and
citizens to invest overseas or trade stocks in Hong Kong.
However, an increasing complicated policy environment means any
move must be based on careful analysis of the domestic and
international situation.
Fan Gang, director of National Economic Institute with the China
Reform Foundation and a top Chinese economist, said China still has
300 million people anxious to find jobs, which causes intense
competition for employment and brings down wages, making
stimulation of domestic consumption more difficult.
"If the revaluation led to the reduction of jobs, reduction of
employment, some jobs would go to the Bangladesh, Vietnam and
Indonesia," he said.
He warned of a more likely scenario of expanded domestic
consumption becoming more difficult.
In the meantime, major trading partners like the United States
won't see their trade surplus against China narrowed, because it
may just go to other emerging economies like Vietnam or
Indonesia.
In the past, Chinese policymakers mainly faced the task of
growth, but now with a shifting focus to harmonious and sustained
economy, they need to balance diversified demands, such as
environment, social security and employment.
Zhang with the NDRC also said China's opening and reform policy
would remain the same after the 17th National Congress of the
Communist Party of China scheduled for October 15.
The congress, held every five years, puts forward guidelines for
the nation's development.
However, the role of innovation and sustained development will
be even higher.
Dai Xianglong, mayor of Tianjin, one of the four municipalities
together with Beijing, Shanghai and Chongqing, said economic growth
must be achieved with progress in environmental protection, a
healthy social security system, and a transparent and fair legal
framework.
NDRC Vice-Minister Zhang also urged companies with foreign
investment in China to shoulder the responsibility of ensuring and
improving product quality.
Sixty percent of China's exported products are made in
foreign-funded companies, said Zhang. These companies should have
an eye on their product quality in terms of designing, setting up
standards and making requirements for raw materials.
"Good product quality is crucial to a company's long-term
development," he said.
(Shanghai Start September 8, 2007)
