China's attempt to balance its remarkable growth and capital account must be done in harmony with its domestic social-economic climate, officials and experts said.
However a complicated decision-making environment is proving to be a challenge for the country's strategic thinkers.
Zhang Xiaoqiang, vice-minister of the National Development and Reform Commission (NDRC), said at the Inaugural Annual Meeting of the New Champions in Dalian that the country had paid great attention to achieve a balance of its current account.
"With the restructuring of international industries in a globalized age, China has become a large manufacturing and processing trade center and this situation will not change easily," Zhang said.
He said the country had almost US$1.4 trillion foreign reserves by the end of July, mainly as a result of trade surpluses and inflows of foreign investments.
In the first seven months, the nation booked trade surpluses of US$136.82 billion, while foreign investors poured in US$36.93 billion.
Zhang said China had been trying to expand domestic consumption to reduce reliance on foreign trade, and increase imports of goods and services that the country needed.
The country has introduced measures like increasing wages of employees, creating more jobs and providing social security to poor people.
It also designed schemes to allow Chinese mainland companies and citizens to invest overseas or trade stocks in Hong Kong.
However, an increasing complicated policy environment means any move must be based on careful analysis of the domestic and international situation.
Fan Gang, director of National Economic Institute with the China Reform Foundation and a top Chinese economist, said China still has 300 million people anxious to find jobs, which causes intense competition for employment and brings down wages, making stimulation of domestic consumption more difficult.
"If the revaluation led to the reduction of jobs, reduction of employment, some jobs would go to the Bangladesh, Vietnam and Indonesia," he said.
He warned of a more likely scenario of expanded domestic consumption becoming more difficult.
In the meantime, major trading partners like the United States won't see their trade surplus against China narrowed, because it may just go to other emerging economies like Vietnam or Indonesia.
In the past, Chinese policymakers mainly faced the task of growth, but now with a shifting focus to harmonious and sustained economy, they need to balance diversified demands, such as environment, social security and employment.
Zhang with the NDRC also said China's opening and reform policy would remain the same after the 17th National Congress of the Communist Party of China scheduled for October 15.
The congress, held every five years, puts forward guidelines for the nation's development.
However, the role of innovation and sustained development will be even higher.
Dai Xianglong, mayor of Tianjin, one of the four municipalities together with Beijing, Shanghai and Chongqing, said economic growth must be achieved with progress in environmental protection, a healthy social security system, and a transparent and fair legal framework.
NDRC Vice-Minister Zhang also urged companies with foreign investment in China to shoulder the responsibility of ensuring and improving product quality.
Sixty percent of China's exported products are made in foreign-funded companies, said Zhang. These companies should have an eye on their product quality in terms of designing, setting up standards and making requirements for raw materials.
"Good product quality is crucial to a company's long-term development," he said.
(Shanghai Start September 8, 2007)
