China praises 'helping touch' of intervention
China's top economic planner, praising the 'helping touch' of government intervention, says inflation this year will fall below last year's 6.1 per cent.
'We are very optimistic that this year's price rises will be lower than last year's 6.1 per cent rise in the retail price index,' Chen Jinhua , head of the State Planning Commission, said.
Heavy government intervention to artificially keep prices low had partly helped bring last year's inflation down from 14.8 per cent in 1995.
Mr Chen said despite nearly two decades of reforms, the 'invisible hand' of the market still needed the 'helping touch' of the state.
'We want to make up for the defects of the market,' he said.
This year, about three percentage points of the price rise would come from disparities in supply and demand, which would be relatively small due to a predicted surplus of industrial products, he said.
A further one percentage point rise would come from continuing price reforms aimed at slowly removing subsidies from goods such as coal, oil, transport and housing.
Mr Chen said that China had not ruled out new projects for the construction of oil refineries despite concerns about over-capacity in the industry.
Although the commission had indicated that it did not want more small projects before 2000, it would examine proposals for big, efficient refineries - including those proposed by foreign concerns - on a case-by-case basis.
'If foreign investors come to China and propose joint ventures [in the refining sector], we will examine their proposals on a case-by-case basis,' Mr Chen said.
'We will see whether these projects are in the interests of our policy of broad structural readjustment.' He said refining capacity was now only about 70 per cent utilised and many refineries were too small to be efficient.
The commission also wanted to avoid new construction in areas where output would not be used effectively, Mr Chen said.
'Oil refining is one of our pillar industries . . . that is why we have sent a signal that any new refineries must avoid duplication of facilities. But state guidance is necessary,' he said.
The commission said last year it would not approve projects up to 2000 although officials have said the thrust of the policy was to prevent construction of smaller operations and those in areas that already were not making use of existing capacity.
Oil industry officials said there were more than 100 refineries in the country, many with limited output.