The Executive Meeting of State Council agreed on Nov. 5 that ten measures would be taken to expand domestic demand and enhance economic performance. The current policy adjustment was regarded as imperative and a must.

 

The national economy must maintain a steady growth, neither too fast nor too slow. And the stimulus for economic growth largely depends on three factors, namely, investment, consumption as well as export. The economy can only be developed when these three factors are given equal importance and implemented at the same time.

 

Countries in Europe and Americas have suffered greatly from the global financial turmoil, and of course no countries could be left unaffected. China, after thirty years of reform and opening-up and with rising foreign trade performance, will inevitably fall into one of its targets. Export was greatly affected and closedown of some of the enterprises engaged in foreign trade apparently hindered economic development.

 

The uncertain future for world’s economy also darkened the prospect for China’s export and investment, and would have a negative impact on global-market-oriented economy and investment in particular. Moreover, the investment that was closely connected to foreign trade would be also slowed, or even terminated.

 

The worsening situation was a sign for carrying out immediate adjustment. If not, the economy will definitely fall to its all-time low, and the goal of being good and rapid will be empty talk.

 

The goal for the adjustment is clear, and the measures can be summarized in four categories:

 

First is to expand investment, including the housing project for low-income urban residents, infrastructure construction in rural areas, reconstruction and relief work in disaster-hit areas and so on;

 

Second is to raise income, including pay raise for urban and rural resident and raise for grain purchasing price;

 

Third is to realize tax cut, including the transitional reform of value added tax;

 

Fourth is to ease credit, including the removal of credit restriction on commercial banks.

 

The earnest implementation of ten measures will be definitely accompanied by expansion of investment and consumption, which are able to offset the decline in export.

 

The expansion of investment, a huge package worth of billions of yuan, can be realized through national financial resources, or by the issuance of national bonds.

 

China undertook an effort of implementing a proactive fiscal policy after the Asian Financial Crisis in 1997 to help expand domestic demand. Such a policy could be interpreted as “government would buy whatever the public wouldn’t buy, whatever would not be brought now can be brought in the future.” It clearly demonstrated the relation between consumption and investment, expenditure and deficit.

 

China witnessed steady economic growth in the first three quarters this year, and the GDP recording an annual rate of 9.9 percent. CPC Central Committee showed great foresight while making such policies. State Council requested the policies must be carried out immediately, forcefully, accurately and prudently. Chinese economy will surely win the battle against the global economic recession and yield better results. –People’s Daily Online