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Reining in a runaway economy for people's benefit

By Xin Zhiming (China Daily)
Updated: 2007-03-06 09:35

While other countries are scratching their heads thinking about how to accelerate their economic growth, China is burdened with a diametrically opposite problem.

The country's gross domestic product (GDP) has grown by more than 10 percent for four consecutive years, but its structural problems are too serious to ignore.


A migrant worker fixes wood braces at a bridge construction site on the outskirts of Hohhot, Inner Mongolia. China's fixed-asset investment has been dynamic, rising 24 percent in 2006 over the previous year. [Natalie Behring/Bloomberg News]
 

"The Chinese economy has been driven mainly by investment and exports," Hu Shaowei, a senior economist with the State Information Center, says. Such a one-sided pattern of growth has created a spate of problems, such as environmental degradation and weak domestic consumption.

Wang Xiaolu, deputy director of Beijing-based National Economic Research Institute, says: "Such a pattern is not sustainable in the long run."

Excessive investment has brought down consumption and made the economy increasingly dependent on fund inflow. Strong exports, on the other hand, have led to a huge foreign exchange reserve, the efficient use of which remains a challenge.

The Chinese government proposes to focus on quality growth, instead of fast, unsustainable expansion to avoid drastic swings in the economy.

In his Government Work Report presented to the Fifth Session of the 10th National People's Congress (NPC) yesterday, Premier Wen Jiabao expressed concern over expanding fixed-asset investments and trade imbalance, urging that their acceleration be checked.
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