Private sector 'not hurt by controls'

PUBLISHED : Monday, 08 November, 2004, 12:00am
UPDATED : Monday, 08 November, 2004, 12:00am

Measures introduced to cool the economy have not hampered the development of private enterprises, Beijing's top economic planner says.

Ma Kai , chairman of the State Development and Reform Commission, said the introduction of price controls, and tougher restrictions on borrowing and investment were aimed mainly at cutting back on the number of inefficient government projects.

Mr Ma was quoted in yesterday's edition of the mainland's Financial Times newspaper as saying that it was a complete misunderstanding that macro-controls had hurt private enterprises.

There has been debate on the mainland about the effects the macroeconomic controls are having on the private sector.

Mr Ma said the control measures, introduced between January and September, had resulted in 4,000 government projects being put on hold.

But during the same period, the private sector grew 48.5 per cent faster than government-backed companies.

Mr Ma added that the measures had encouraged capital to shift from the developed eastern regions - where many of the overheated sectors are based - to the undeveloped west.

He noted the central government had this year alone approved 10 projects in the western region worth more than 80 billion yuan.

As many of the projects on hold had been backed by local governments, Mr Ma said there was sure to be criticism of the measures.

But he defended them, saying: 'The central government could only use such methods to restrict non-market investments.'

He also warned of continuing bottlenecks in the supply of coal, electricity and oil persisting until at least 2006.

He noted that the main problems plaguing the economy were stagnant development of the market system, a lack of industry regulation and poor legal knowledge among government officials.

Mr Ma said that during the next stage of macroeconomic adjustments, the central government's priorities would be to raise capacity to boost agricultural output and incomes, standardise the scale of capital investments, improve the energy supply, and strengthen market management and price supervision.


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