Govn't should control investment impulse: Experts

Edited and translated by People's Daily Online

Labor shortages still exist in parts of China, and migrant workers are not returning home on a large scale, reflecting a favorable employment situation. The country does not need to launch another 4-trillion-yuan economic stimulus package.

Fundamentally speaking, the country must make greater efforts to promote the development of its private sector, in order to reduce investment inefficiencies. The Chinese government should control its investment impulse, create a level playing field for private companies, and ease the tax burden on small and medium-sized companies, so they can compete more equally.

It was stressed at a recent executive meeting of the State Council that the government should “give more priority to maintaining growth,” ensure timely implementation of the major projects in the 12th Five-Year Plan, and launch a number of major projects that matter to the overall situation. It should also accelerate the preparatory work for certain railway projects, infrastructure projects in rural areas and western regions, and other planned projects in the fields of energy conservation and environmental protection, education, public health, and information technology.

The National Development and Reform Commission has recently accelerated the examination of major projects, according to information on its website. It processed more than 100 project applications on May 21 alone.

The acceleration has caused widespread concern, and sparked speculation about a new economic stimulus package. People’s Daily thus interviewed Xue Lan, dean of the School of Public Policy and Management at Tsinghua University, Liu Yuanchun, deputy dean of the School of Economics at Renmin University of China, Sun Lijian, deputy dean of the School of Economics at Fudan University, Su Ming, deputy director of the Research Institute for Fiscal Science under the Ministry of Finance, and Bai Chong’en, deputy dean of the School of Economics and Management at Tsinghua University, about this issue.

Reporter: Why did the State Council call for giving more priority to maintaining growth and accelerating the examination and implementation of certain major projects?

Liu: The Chinese economy is experiencing a gradual slowdown and the increasing downward pressure may cause financial and employment problems. As for the troika driving the economic growth, namely investment, consumption, and export, the country’s exports have grown slower than expected due to increasingly weak external demand. Consumption is unlikely to grow by leaps and bounds in the short term. Therefore, it becomes necessary to modestly increase investment to maintain steady economic growth.

Sun: The European sovereign debt crisis is still deteriorating. The growing risk of sovereign debt defaults is posing a major threat to banks in Germany, France, and other European countries, and many companies there are realizing their assets to “survive the winter.” Furthermore, fiscal austerity will make their already tough employment and consumption situations even worse. Although China’s exports to other BRICS countries have maintained relatively rapid growth this year, their economies are all highly dependent on external demand, and may witness a slowdown in the future, adding uncertainty to China's export growth.