Austerity 'to aid growth'

PUBLISHED : Monday, 13 December, 1993, 12:00am
UPDATED : Monday, 13 December, 1993, 12:00am

GUANGDONG has built up a stronger foundation this year for sustained high-speed growth in the decade thanks to macro-economic control measures, economic officials claim.

The economic adjustments have ''to some extent'' eliminated the underlying dangers in the province's economy this year, the officials were quoted as saying in a China News Service report.

They referred to problems such as a chaotic fiscal order, an overheated real estate market and inflation.

''According to relevant figures here, economic officials were not unhappy with the macro-control measures. Quite the contrary, as an official said 'the economy of Guangdong in the second half of this year would be in a mess if there were no macro-controlmeasures','' the report said.

It has been widely reported that Guangdong, China's economic powerhouse, has expressed strong opposition to the continuation of the austerity programme, which began with a 16-point decree by Executive Vice-Premier Zhu Rongji in July.

Economic cadres in the province said the austerity measures had helped curb inflation without blocking the momentum of economic growth.

The report said that Guangdong's total Gross Domestic Product would increase by about 20 per cent this year. Last year's total was 220 billion yuan (about HK$286 billion).

Industrial output is expected to rise by about 30 per cent.

More importantly, officials predicted that the total revenue of the province would soar by 30 to 40 per cent from last year's total of 22 billion yuan.

Economic cadres said it was a ''positive trend'' that the growth in the province's revenue was higher than general economic growth, which was estimated at about 20 per cent.

Officials said such a trend had been rare in the past few years and what they had been hoping for.

They were optimistic that economic prospects would remain sound, adding that the economy should encounter no major obstacles to double-digit growth in the future.

The officials argued that unlike the economic retrenchment in 1988, the current austerity measures were carefully tailored to meet market demand.

''It [the macro-control programme] has enabled the economic adjustment to break away from the previous cycle of stop-go,'' they said.

Economists said the huge accumulative investment of the province in the past few years had provided strong support for sustained growth in spite of the negative impact incurred by a slower pace of growth under the austerity programme.

Another significant factor, they said, was that the total output of the non-state sector had already surpassed that of the state sector.

Strongly based on the market demand, the non-state economy had been able to survive relatively unharmed under the austerity programme, the report said.