Economic restructuring urged

Thanks to the large-scale stimulus plan launched in the second half last year, Chinese economic recovery is well on track.

The Purchasing Managers' Index (PMI) of China's manufacturing sector rose to 54.3 percent in September, up 0.3 percentage points from a month earlier, indicating a good performance of the country's industrial sector.

According to China National Energy Administration, China's power consumption in September also continued to rise at a faster rate. Power consumption rose 10.24 percent from the same month last year to 322.41 billion kilowatt hours last month.

Fixed-asset investment increased in the first eight months by 33 percent from a year earlier, and the growth rate was 0.1 percentage point higher compared to the first seven months of this year.

Despite the achievement in economic recovery, Zhao Jinping said uncertainties remained in the world economy and some stimulus policies were yet to produce effects, so the stimulus plan should not be ended or weakened.

Besides, some economists said, as the stimulus plan was kept as an expedient measure rather than long-term policies, the government should step up efforts to restructure the economy to solve its deep-rooted deficiencies.

Among the three economic engines - consumption, investment and export, the latter two have always been dominant forces in propping up the economy. Declining demands in the weakening international market amid the financial crisis reveals the drawback of China's economic structure -- too much dependence on foreign markets.

Zhuang Jian said: "The current stimulus plan was led by investment, fixed investment in particular. This might cause problems if not dealt with properly. Given the foundation and momentum for the recovery was still not solid, if we continue the investment-oriented policies, the industrial structure may remain unbalanced and the investment wasted."

"Weak domestic consumption is the key problem that makes the foundation for recovery fragile. Expanding domestic consumption will be the focus in restructuring the economy," Zhao Jinping said.

Most economists see no threat from inflation despite the sharp increase of loans. New yuan-denominated loans in the first nine months stood at 8.67 trillion yuan, 5.19 trillion yuan more than the same period last year, according to the people's Bank of China, the central bank.

"However, there are still no sign of inflation as both CPI and PPI are still minus, but the government should improve the stimulus package and deal with the problems in the economic development properly," said Zhuang.

China's GDP is expected to grow about 8.3 percent year on year for 2009, and there will be no significant inflationary pressure this year or in 2010, according to a report released earlier this month by the Chinese Academy of Social Sciences.

(Xinhua News Agency October 19, 2009)