Chinese Economy Faces 5 Major Challenges: Top Planner

China has maintained rapid economic growth so far this year despite the overwhelming slowdown in the rest of the globe, but there are still many outstanding challenges and difficulties posed for the Chinese economy, a top Chinese economic planner said Wednesday.

However, "the most serious problem China confronts at the moment is the harsh international economic situation, the impact of which is coming to be felt here," said Zeng Peiyan, minister in charge of the State Development Planning Commission, when reporting on economic work to the National People's Congress (NPC), China's legislature, this afternoon.

The U.S. economic slowdown since the second half of 2000 has resulted in a drastic decrease of imports by that country, the Japanese economy is on the verge of recession again, the EU is under attack from both economic slowdown and inflation, and China' s neighboring countries are also suffering from lack of growth, Zeng said.

All these factors have contracted the demand for Chinese exports, and currency devaluations in some countries have undermined the competitiveness of Chinese goods in terms of prices, he said.

As a result, China's export growth rate fell 0.6 percent in June, compared with a 13.7 percent increase in January, he said.

Zeng elaborated five major difficulties and challenges for the Chinese economy to the NPC lawmakers, of which the other four are:

-- Farmers' income growth is slowing because of structural problems in rural economy, which has become the most aggravating issue for national economic development;

-- Conflicts between domestic demand and supply are mounting, as farmers remain relatively poor, the number of low-income city dwellers is on the increase and manufacturers are restrained by limited investment in products that meet the market demand. In addition, the labor-intensive service sector is still under- developed;

-- More workers may be laid off as exports contract;

-- China has suffered from drought for two consecutive years, and droughts in many provinces this year have been the harshest in the past few decades.

Irregularities in the market order and the frequent occurrence of major industrial accidents are also posing threats to the normal operations of the economy and social stability, the lawmakers were told.

Zeng pledged further efforts in eight aspects to tackle the above-mentioned problems in order to "keep the present momentum of economic development."

They include adjustment of the rural economic structure for the increase of farmers' incomes, improvement of the work of infrastructure construction to promote the increase of fixed assets investment, encouraging people to spend more and rectifying the market economic order.

Zeng also pointed out that as China's accession to the World Trade Organization is imminent, the country should accelerate its work for adjusting laws and raising expertise to ensure that the entire Chinese economy should be ready for the challenge.






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