China Aims for 7% Economic Growth This Year

The Chinese government officially announced a goal of 7% economic growth for this year and said that it would maintain its macroeconomic policies to boost domestic demand and promote investments. Premier Zhu Rongji reported the `2003 Government World Plan` to 2,984 delegates from local governments at the 10th National People`s Congress in the Great Hall of the People in Beijing.

Zhu said, in his speech, that China should grow at least seven percent in 2003 after seeing eight percent growth in the gross domestic product last year.

The premier, in particular, stressed that the government would continue to resort to fiscal spending to boost domestic demand, increasing private sector spending by raising salaries and severance payments.

It plans to issue some 140 billion yuan worth of bonds, which is smaller than the 150 billion yuan of last year, to finance social infrastructure projects such as roads, railways and ports.

China began to increase fiscal spending in 1998 after the Asian financial crisis, in an effort to stave off spread of a region-wide crisis in its economy. Since then, it has issued some 700 billion yuan worth of government bonds to boost funds.

The modest decline in bond issuance this year comes in response to growing concern at home and abroad over a snowballing budget deficit from fiscal spending.

Premier Zhu emphasized that “Pegging the yuan to the U.S. greenback was the right decision,” rebuffing the suggestion by the Japanese government that China appreciated the value of its currency to stave off a possible bout of deflation.

“Our aggressive export policy turned out to be a wise decision,” he also noted, advocating exports of low-priced industrial goods. His remarks imply that the Chinese government would stick to its export-oriented policy as it increases fiscal spending to boost demand in the country.

Zhu also called for efforts to spread prosperity to the countryside, create jobs and build a social safety net for the poor. He said farmers faced a glut of agricultural products, sliding prices and slowing income growth, and tax burdens had to be eased by expanding pilot reforms that would eliminate arbitrary fees. He also backed policies to allow freer movement for those looking for work in the cities.

Zhu, due to retire soon from the National People’s Congress, outlined an overall economic goal instead of elaborating on details.

The National People`s Congress is due to take steps to transfer power to a younger generation, appointing successors to President Ziang and Parliament chairman Li Peng.

Yoo-Sung Hwang yshwang@donga.com