China balances growth and inflation

(Xinhua)
Updated: 2008-10-02 16:00

RESTRUCTURING IN MIND

To find a balance between "keeping stable and the relative quick growth of the economy" and "curbing the surging rise of prices," a key point for China's macro control policies, analysts point out the volume-control effect of stringent monetary policy ought to continue; the economic structure needs to be further improved through prudent fiscal policy.

Other analysts foresee a loosening of the tight monetary policy to provide liquidity for enterprises, especially exporters squeezed by weakening demand, credit control and rising costs.

Citing pressures on some industries and enterprises as one of the major conflicts in the economy, Zhu points out : "It would take time for the latest supportive policies to show an effect and for companies to adjust."

In face of the rigorous environment, enterprises largely were adjusting their product mix, improving management and elevating product added values to alleviate the operation predicament.

In an apparent move supporting industrial innovation, Chinese administrators raised the export tax rebate rate for some textiles and garments from 11 to 13 percent in early August; some highly-polluting products, such as chemical- fiber cloth and viscose-staple fiber were ineligible for the higher export tax rebate.

The large number of SMEs in the Pearl River Delta region had closed some of their factories or suspended production for the time being, because the majority of the factories remained stuck in contract manufacturing, or OEM (overseas export manufacturing) for foreign buyers," says Dong Xiaolin, a Guangdong University of Foreign Studies professor. "This was not much of an issue for most Guangdong manufacturers in the past when a large sales volume and depressed wages had combined to produce big profits."

"But making money is no longer that simple now. Manufacturers need to move up the value-added chain."

As for the toy producer Cheng Yongchang, he is ready to follow the tide. "We will keep exploring new customers, and new products such as vehicle spare parts and daily necessities. And we will use more automated facilities to replace manual work for higher efficiency."

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