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Keep growth on track

(China Daily)
Updated: 2008-07-29 07:29

An orderly slowdown in the first half of this year has persuaded Chinese leaders to put maintaining a steady and fast economic growth, rather than preventing overheating, along with curbing inflation as top economic priorities for the remainder of this year.

The shift in focus, which highlights the authorities' worries about downside risks to economic growth, might effectively prevent the economy from further losing steam in the second half-year.

But it should not be deemed simply a stop-gap measure to maintain double-digit growth. The effort to keep the Chinese economy on the track of steady and comparatively fast growth can also help speeding up economic restructuring and the transition of growth patterns.

Due to severe natural disasters, credit tightening and weaker external demand, China's economic growth slowed from 10.6 percent in the first quarter to 10.1 percent in the second quarter, the slowest pace since 2005.

Weakening exports because of a US-led global slowdown have particularly stoked concern that China's growth may decline further, leading to bad loans, job cuts and sinking profits.

Following a number of inspection tours by top leaders of export powerhouses in coastal provinces earlier this month, a meeting of the Political Bureau of the Communist Party of China Central Committee was held last Friday to fine-tune major tasks on the economic front.

The central authorities confirmed that the country's economy was developing in the expected direction after overcoming challenges from home and abroad this year.

Last year, excessive investment and export growth had once put the economy on the border of overheating and runaway inflation. The authorities had thus given top priorities to preventing overheating and fighting inflation for 2008.

However, the passage of the first half-year saw not only a considerable slowdown of the economy but also a gradual fall of consumer inflation after it peaked in February.

Given that global inflationary pressure remains high, it makes little sense for China to lose vigilance against inflation.

As to economic growth, the ongoing slowdown has added to the suffering of many Chinese exporters caught by stricter environment, energy and labor standards, rising material cost and fast appreciation of the renminbi.

It is necessary to goad Chinese enterprises to go green or go high-tech to facilitate the country's pursuit of sustainable development. But it takes time for them to adapt to the new reality. The central authorities' decision to boost economic growth will create a favorable condition for them to speed up long-term restructuring and transformation. Domestic enterprises should not mistake it as a chance to delay structural changes.

(China Daily 07/29/2008 page8)