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Overcapacity troubles Chinese economy, reform needed (4)


08:45, April 15, 2013


The overcapacity problem may be solved through structural reform that boosts innovation and quality-oriented economic growth.

Li said the way local government performance is evaluated should be changed to fit the market and facilitate fair competition, as well as reduce administrative meddling.

Local governments should be banned from using direct stimulative measures to encourage investment, he said.

He also called for more transparent and stricter approval for land projects, leaving decision and risk for enterprisess to cope with.

Financial and taxation reform needs further implementation, in order to act as an efficient tool to restrain local investment while reducing pressure on the expenditures of local governments.

Necessary taxes for resources are expected to cover more products and sectors with high energy consumption, Li said.

Governments at all levels should create a healthy environment that allows the market to maintain itself and weed out unsustainable capacity, he said.

Li said less-controlled market operation and stricter approval for key projects can contribute to realizing greater market competition.

"More open market access, a stricter bankruptcy system and a smoother market pricing mechanism can help give full play to market competition," Feng added.

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Email|Print|Comments(Editor:ChenLidan、Ye Xin)

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