Big risk of mainland missing development goals amid the global crisis, minister warns

PUBLISHED : Thursday, 25 December, 2008, 12:00am
UPDATED : Thursday, 25 December, 2008, 12:00am

The mainland is at 'grave risk' of missing its goals for social and economic development if it fails to deal properly with problems thrown up by the global financial crisis, the minister for economic planning warned yesterday.

'As a result of the global financial crisis, we are facing severe challenges in the implementation of the 11th five-year plan,' Xinhua quoted Zhang Ping , minister in charge of the National Development and Reform Commission, as saying.

The 11th five-year plan runs from 2006 to 2010.

He said the global financial turmoil was expected to last for some time, and a global economic downturn was inevitable.

'If we are unable to properly deal with the difficulties, we might be faced with grave risks of failing to realise our strategic goals in economic and social development.'

To counter this, a cabinet meeting chaired by Premier Wen Jiabao decided yesterday to take steps to boost domestic consumption and exports, the two main drivers of the world's fourth-largest economy.

To boost growth in the short term, the government would invest an additional 100 billion yuan (HK$113 billion) in new projects in the fourth quarter - which ends next week - and allocate 20 billion yuan to a special earthquake relief fund, he said.

Mr Zhang warned the quality of bank assets would worsen as corporate losses mounted. Under the 4 trillion yuan stimulus package the central government announced early last month, banks are being encouraged to lend more for infrastructure projects and to small and medium-sized firms badly hit by the crisis.

Mr Zhang also proposed measures to help boost exports, help low-income families and fund education, health care, pensions and environmental protection. He did not elaborate.

He warned that weakening demand for property had affected economic growth. The minister said the volume of real estate sales, in square metres, in the first 11 months of the year was 18.3 per cent lower than in the same period last year.

Mr Zhang's deputy, Zhang Mao , said the government would regulate land sales and seek to stop land prices rising too rapidly.

'Volatility in the property market may induce some negative impact,' Zhang Mao said.

'A moderate decline in high property prices can help the property market return to a path of rational and healthy development, but we ought to prevent a sharp fall in property prices.'

The government has stepped up its efforts to stabilise the property market since mid-September - slashing lending rates and reducing duty on home sales.

Economic growth slowed to 9 per cent in the third quarter, and to 9.9 per cent in the first nine months, compared with 11.9 per cent for the whole of last year. Economists expect a further weakening of growth in the fourth quarter. But Li Yang, a prominent economist, said the economy would probably recover in the second half of next year, making it one of the first to see a turnaround.

To make that a reality, Beijing is taking steps to boost development in nine major industries - steelmaking, carmaking, shipping, petrochemicals, textiles, light manufacturing, nonferrous metals production, equipment manufacturing and information technology - Zhang Ping said in a briefing to lawmakers.