Watchdog urges control of economy 'tumour' By Fu Jing (China Daily) Updated: 2005-04-27 06:16
An economic watchdog has said over-investment needs to be curbed, branding
the problem "a tumour on the economic body of China."
Cao Yushu, spokesman for the National Development and Reform Commission
(NDRC), said yesterday that the government will step up efforts to put the
brakes on over-investment in sectors including iron and steel, real estate,
manufacturing, and power generation.
"We will continue to enforce regulations on land use and bank loans for these
sectors," said Cao at the commission's press conference.
Cao's announcement followed a warning about the over-heating economy from
NDRC Minister Ma Kai over the weekend.
"While many long term problems with our economic development have not been
thoroughly addressed, new challenges continue to occur," Ma told a national
conference on economic reform in Shenzhen, southern China.
In addition, the Ministry of Construction organized a national conference in
Shanghai over the weekend to discuss strategies to control soaring house prices.
The debate will continue next month when a high-level real estate forum is
scheduled to be held in Beihai in the Guangxi Zhuang Autonomous Region. The city
suffered badly from China's over-investment in real estate during the early
1990s.
Ma said new challenges included increasing farmers' income, preventing
financial fraud and controlling the pressure caused by possible rises in the
price of commodities and services.
During his speech, Ma attributed the problem of over-investment to the
government's taking the "wrong role" in its handling of the market economy.
"The government should act as referees in the market-oriented economy, not as
investors," said Ma.
Over-investment has been rife across China, pushed forward with the backing
of local governments.
Ma said the central government planned to transfer 260,000 hectares of
farmland to industrial and housing use this year, but so far local governments
nationwide have applied for 800,000 hectares to be converted.
Researchers agreed that reform of the government's role is vital in
cooling-down the over heating economy.
Lin Yueqin, researcher with the Chinese Academy of Social Sciences, urged for
reform on evaluating the performance of officials to be speeded up.
"Economic indicators, such as GDP (Gross domestic production), should not be
the major gauges used to assess their performance," said Lin.
Only once the evaluating system puts priority on issues such as health and
education can local governments turn their attention to other areas, said Lin.
Electricity shortage
Speaking at the NDRC press conference, spokesman Cao also warned that China's
electricity supply will continue to fall short of demand because of a shortage
in the supply of coal.
He said stringent safety campaigns in coal producing provinces such as
Shanxi, Shaanxi and Henan will reduce production this year.
Meanwhile, increased production in the chemical and metallurgical industries
will increase the demand for electricity.
"The electricity shortage will be grim in East China, South China and North
China," said Cao.
Rail transport capacity is also a problem for the economy, the network
conveying just 40 per cent of the cargo which should be transported by rail.
(China Daily 04/27/2005 page2)
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