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Macro Economy: China can minimize negative external economic impact

(Xinhua)
Updated: 2008-11-04 21:29

China will minimize any negative external economic impact and maintain stable, relatively fast growth if it applies appropriate macroeconomic measures, a senior official with the National Development and Reform Commission (NDRC) told Xinhua on Tuesday.

Han Yongwen, spokesman and secretary-general of the top economic planning agency, said he based this assessment on the huge, sound economy China has built over the past three decades and the enormous domestic market.

He believed China could minimize any negative impact by expanding domestic demand and increasing investment in crucial infrastructure, particularly in rural areas.

According to Han, although gross domestic product (GDP) growth slowed to the single-digit rate of 9.9 percent in the first three quarters of this year, that was still more than the average for each of the past 30 years. The rate partly reflected the government's macro-control efforts, which emphasized maintaining growth while curbing inflation.

Han noted in the first nine months, the economic structure further improved, and the three major driving forces of the economy -- exports, investment and consumption -- tended to be balanced.

The chief economic problem was worsening downward pressure, he pointed out, citing exports being driven down by shrinking demand abroad, as well as weak domestic demand and higher costs, which were hurting corporate investment sentiment.

However, he stressed: "Facing these difficulties, we should enhance confidence. It is imperative for us to perceive favorable conditions and positive factors for acting against the negative outside environment and promoting development in a scientific way."

He believed economic fundamentals were sound and China's risk prevention abilities had been reinforced over the past 30 years. There was much potential to expand domestic demand.

To increase domestic demand, more money would go to farmers, rural areas and agricultural production, and more investments would be made in railroads, urban rail systems and environmental protection facilities, he said.

The country would encourage enterprises to increase investment and push forward technical progress, Han added.

Wu Xiaoling, former deputy governor of the People's Bank of China (PBOC), the central bank, said over the weekend that fiscal and other policies were of more importance than monetary policy to maintain economic stability amid a complex global economic situation.

She urged China to pursue stable monetary policy in the face of risks from lingering inflationary pressure and an economic slowdown.

Han's comments were echoed by NDRC Vice Minister Liu Tienan, who said the government should continue efforts to expand domestic consumption amid an uncertain global economy.

Liu urged accelerated industrial restructuring, innovation and a change in the development mode.

Su Ning, deputy governor of the PBOC, also agreed with Han, saying there was still room for more domestic consumption. Sun added the central bank would adopt a flexible and prudent monetary policy.

Fu Ziying, Vice Minister of Commerce, said it would be tougher to maintain stable export growth next year because of global financial turmoil. Fu said the government should increase support to export-oriented enterprises.