In Beijing on Thursday China's 2006 Central Economic Work
Conference closed after agreeing on major economic strategies and
policies for 2007. The conference made balancing international
payments a major goal for 2007.
Chinese leaders pledged to redouble efforts to expand imports
and overseas investment while maintaining rational export growth
and the use of foreign investment.
President Hu Jintao and Premier Wen Jiabao gave speeches at the three-day
conference.
China's trade surplus reached US$133.62 billion in the first ten
months this year. This exceeded the US$101.9 billion for the whole
of 2005.
Having attracted more foreign investment than any other
developing country for the 15th consecutive year China is estimated
to hold about US1 trillion in foreign exchange reserves.
The growing trade surplus has led to trade friction while the
large international payments surplus has increased pressure for
appreciation of the Chinese Renminbi currency.?
Experts suggest too much foreign exchange has forced the central
bank to issue more Renminbi causing excessive fluidity in domestic
financial markets.
Conference delegates proposed that the government should focus
on bringing in advanced technologies, management and foreign
expertise. The government would continue the strategy of "going
global" by encouraging overseas investment, officials said.
China's direct investment overseas neared US$12.3 billion last
year, according to the 2006 World Investment Report by the United
Nations.
The report shows China's overseas investment accounted for only
0.59 percent of global foreign investment last year. This is much
less than the 4.4 percent share of? global gross domestic
product (GDP) value and the 6.5 percent of world trade.
The government should increase export tax rates on primary
resources like unprocessed steel and encourage imports of
technologies and resources, said Chen Dongqi, vice director of the
Academy of Macroeconomic Research with the National Development and
Reform Commission.
Another focus of the conference was the country's low-income
groups. Delegates proposed to boost the income levels and
consumption of rural residents and the urban poor. They called for
greater attention to be given to creating employment
opportunities.
At the same time the proportion of middle-income groups should
steadily increase while excessively high earnings be effectively
adjusted through taxation, officials urged at the conference.
Data shows the total consumption by the Chinese government and
public accounted for 51.1 percent of the country's GDP in the first
three quarters. This is down from 62 percent in the 1980s.
The proportion of public consumption in the GDP hit a record low
last year. It dropped to 38.2 percent from 48.8 percent in
1991.
"The key to expanding domestic consumption is to stimulate
consumption especially among rural people and speed up the
development of public services in rural areas," said Zhao Xijun,
vice director of the School of Finance with the Renmin University
of China.
Too much of China's economic growth had been driven by trade and
investment which had increasing negative effects, said Zhao.
China saw a 31.3 percent growth in urban fixed-asset investment
in the first half of the year. This is the highest in the past
three years.
The government would continue to rein in investment and credit
and tighten controls on the real estate sector, said
officials.
(Xinghua News Agency December 8, 2006)