Provinces warned of economic swings
Runaway investment, excessive growth in loans and a huge trade surplus mean China can expect serious swings in its economy in the second half of the year unless local authorities get behind central government efforts to cool the economy, a leading party newspaper has warned.
In a three-day commentary series this week, the People's Daily detailed the country's 'second-half economic tasks' and urged provinces to effectively implement the central government's economic directives.
'China has taken measures to address the major, obvious problems. They take time to implement, so some are still developing,' the paper said.
It told lower-level authorities to abandon their reliance on investment in the blind pursuit of economic growth.
'There is an urgent need to control fixed-asset investment, especially in new projects. We will continue to reinforce controls on the property market and efforts to conserve energy and protect the environment,' the paper said.
An analyst from the State Information Centre said the country's focus in the second half of the year would be to implement the policies issued in the first half.
He said provinces were still comparing themselves unrealistically in terms of gross domestic product and that was making it difficult for the controls to bite in the short term. But the situation could improve with the introduction of effective government evaluation systems.
Zhang Hanya , from the National Development and Reform Commission, said there was no need for the government to put the brakes on investment. 'The fairly rapid investment growth is not having any adverse impact on the economy, nor will this happen in the future,' he wrote in the China Securities Journal yesterday.
A moderate rise in the consumer price index in the first half of the year indicated growth was not having a negative impact on people's lives.
But other researchers say it is clear the central government is determined to cool the economy by reining in investment.
'Our country always emphasises the importance of macroeconomic controls. Looking back to the 1994-1995 tightening and 1998-1999 loosening policies, the effectiveness relied on administrative means, instead of monetary and fiscal policies.
The problems lie in the fact that to a large extent, a planned economy is still operating,' economist Mao Yushi wrote in the China Securities Journal.
