Premier: China's economy doing "better than expected" thanks to stimulus
17:07, April 16, 2009
|Chinese Premier Wen Jiabao said Thursday that government stimulus moves had begun to produce results and the economy was now in "better-than-expected" shape.
Wen's remarks at a cabinet executive meeting came after the government said there had been positive economic changes, even though the economy grew just 6.1 percent in the first quarter, the slowest pace in a decade.
The premier cited pick-ups in investment, consumption and industrial output, abundant liquidity in the banking system, and improved market expectations as signs of those "positive changes."
The National Bureau of Statistics said Thursday that first-quarter industrial output grew 5.1 percent year on year, with a rise of 8.3 percent in March.
It also said fixed asset investment rose 28.8 percent to 2.81 trillion yuan (413.2 billion U.S. dollars), with real growth exceeding 30 percent, while retail sales grew 15 percent to 2.94 trillion yuan.
Such positive changes indicated that the government's macroeconomic policies, taken since the second half of last year, have been "timely, powerful, and effective," said Wen, who presided over the meeting.
China announced a 4-trillion-yuan stimulus package last November to boost domestic demand, slashed interest rates five times since last September, unveiled support plans for 10 key industries, and projected a record fiscal deficit of 950 billion yuan this year.
These measures were prompted by a collapse in exports as the global downturn took its toll on the world's fastest-growing economy.
China's economic growth cooled to a seven-year low of 9 percent last year, ending five years of double-digit expansion.
"However, we must also be clear-headed and understand that grounds for the country's economic recovery are not solid enough yet, as circumstances both at home and abroad remain grim," Wen warned.
He said that global financial turmoil was still spreading, and was exerting a deepening influence on the national economy.
The premier cited continued falling in external demands, oversupply in some sectors that would suppress industrial output growth and worsen corporate earnings, reluctance in private investment, increased difficulty in raising farmers' income, the dwindling fiscal revenue, and the acute pressure to create enough jobs.
He warned against blind optimism and called for unslackened efforts to achieve the country's goals of social and economic development.
China is aiming to achieve an 8-percent growth this year, which has long been held as essential for the populous developing nation.
"We should anticipate more risks and difficulties ahead, expect a longer time frame within which we would be able to overcome the crisis, and get prepared with more satisfying measures."
The government would focus on following moves, according to the premier.
-- To bring into play measures aimed at expanding investment.
The country would soon cash in the third batch of pledged central government investment. The central government has so far cashed in 230 billion yuan (33.8 billion U.S. dollars), which is part of the 4-trillion-yuan stimulus package.
The government would also revise government approval of investment projects -- or loosen government grip on investment project approval, to encourage private investment, and would continue the work on stabilizing and expanding foreign investment.
-- To expand consumption, and consumer spending in particular.
The country would continue to improve its policy for subsidies to farmers who buy designated brands of home appliances, and stimulate spending on culture, tourism and information in the service sector.
It would also try to keep spending on such items as housing and auto stable.
-- "Using every possible means" to maintain stable trade growth.
The government would scrap policies that could restrict exports, and extend support to exports of hi-tech and labor-intensive products.
It would also increase imports of important energy resources, heavily-demanded raw materials and key technologies and equipment, and encourage domestic firms to invest overseas.
-- To keep the stable development of agriculture.
The country would continue to carry out policies favorable to farmers and agriculture. It would initiate the plan to increase the country's grain output by 50 million tonnes over the next 12 years.
-- To promote the restructuring of key industries.
The government will unveil details of the stimulus packages for10 key industries as soon as possible, and cash in the fund from central government that will be exclusively used for the restructuring and technological renovation.
The Chinese government would improve policies in favor of innovation and hi-tech industries, and may cultivate new growth in sectors of new energy, energy conservation, environmental protection, bio-pharmaceuticals, telecommunications and modern services.
-- To advance with efforts to improve people's livelihood.
The government would make public the execution plan and documents for the huge health care reforms as soon as possible. The reforms are aimed to provide universal health care to the country's large population.
It would continue to provide support to migrant workers and college graduates who are hunting for jobs.
-- To make sure the financial system is providing necessary support for the economic growth.
The government would adjust the market demand for capital and ensure capital is used to fuel the economic growth.
It would give more support to small- and medium- sized enterprises to meet their capital demand.
-- To increase fiscal revenue by making more efforts to collect taxes that are due according to laws and regulations, and at the same time cutting back on unnecessary expenditures.