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Home >> Business
UPDATED: 15:37, March 14, 2005
Stable economic growth China's top priority: Premier
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Macrocontrol should be on the top of the Chinese government's agenda instead of being abandoned halfway, Premier Wen Jiabao warned Monday.

At a press conference held shortly after the annual session of China's parliament was closed, the premier vowed to maintain a "stable and fast" economic growth rate this year after the world's fastest-growing major economy registered a robust 9.5 percent increase in 2004.

He acknowledged, "There is a dilemma in the economy."

A slow economic growth rate won't do because it will make it more difficult to create jobs, increase revenues and engage in more undertakings for society, while too fast an expansion rate won't do either because if the economy is over stretched for a long time it will be unsustainable, he explained.

As Wen put it, the Chinese economy is like "sailing against the currents": either it keeps forging ahead or it will fall behind.

The foundation for macrocontrol is yet to be consolidated, he said.

"It will be more difficult to increase grain output and farmers' income, and typically, the prices of capital goods are going up by bigger margins."

"Investment growth in fixed assets may pick up again, as coal, electricity, oil and transportation are still in short supply."

Power generation, for instance, grew 12 percent in the first two months of the year, but 25 out of the country's 31 provinces, municipalities and autonomous regions still suffered from black-outs, which reflects a "continuous strain" in economic and living activities, Wen noted.

China began the year 2004 amid serious worries that the economy was dangerously overheated, with easy credit fueling production of factory-gate goods and soaring investment in government infrastructure products.

Inflation rose at an alarming rate, hitting a peak of 5.3 percent last July and August.

This prompted the central government to order energy-saving measures and tell local officials to cut spending on pointless prestige projects and unneeded factories, roads and other facilities. The bank interest rate was raised for the first time in nearly a decade.

On Monday, Wen noted that China performed a "combination blow "in the macrocontrol before succeeding in averting a roller-coaster in the economy and a high inflation last year.

A surprise to most journalists at the Great Hall of the People, the premier said changes of the yuan exchange rate could come "unexpectedly", while criticizing that "some people strongly demand that we raise the yuan's value but they haven't given much thought to what sort of problems would ensue. This is very irresponsible."

The United States and other trading partners are pressing China to let the yuan trade freely or at least appreciate. They say the rate is too low, giving Chinese exporters an unfair cost advantage and hurting foreign competitors.

"We must take into consideration the national interest but also the impact (of the exchange rate reform) on neighboring countries and the world," he said.

Meanwhile, China will continue its policy of developing the capital market and expanding direct financing, said Wen Jiabao.

While acknowledging the weak performance in China's stock market for years, Wen vowed to improve the quality of listed firms, build an open, fair and transparent market, intensify supervision and crack down on any irregularities.

Source: Xinhua

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