Boost to economic planners
BEIJING has given planning-oriented bureaucrats more power in working out ways to achieve the contradictory goals of curbing inflation and propping up the money-losing state enterprises.
Informed sources said the State Planning Commission (SPC) had been empowered to take over the research and planning functions of up to eight ministries and commissions.
They said the bulk of the research units of these departments had been dissolved and taken over by an enlarged research centre in the SPC, which has an establishment of more than 700 academics and officials.
''The SPC Research Centre will have formidable authority and resources in making long-range forecasts and recommending the 'macrolevel' controls the state must exercise,'' an economic source said.
The source added that recent problems in the economy had prompted the leadership to give more emphasis to both direct and non-mandatory state control.
It is understood the leadership hopes that with strengthened research and forecasts, executive orders will be free from the kinds of mistakes underlying such disasters as the Great Leap Forward.
Liberal cadres and academics have criticised the apparent increase in the power of the SPC, deemed a creation of Stalinist state planning.
Analysts said in 1992 and last year, the authorities seriously considered scrapping the SPC and replacing it with a much less powerful State Commission for Social and Economic Development.
However, given the need for Beijing to walk the high wire of containing inflation and cutting unemployment, the planners are again required to provide recommendations for comprehensive government intervention.
In a recent speech, the senior economist with the State Statistical Bureau, Qiu Xiaohua, underscored the importance of striking a balance between conflicting goals.
''If we are too anxious about reducing inflation to within 10 per cent and continuing a tight policy, the market will become flaccid, state enterprises will face more difficulties and the contradictions in employment will become more acute,'' Mr Qiu said.
However, he also warned against loosening the credit indiscriminately, which might lead to inflation that was ''beyond the tolerance level of various sectors''.
Following the lead of Vice-Premier Zhu Rongji, Mr Qiu favoured a selective bailing out of state concerns.
''There is a need to adequately boost investment to support major and basic industries, infrastructure as well as high-technology projects,'' he said.
Mr Qiu predicted that with adequate ''macro-level control'', the growth in the gross domestic product would be about 10 per cent in the first half of the year, fixed-assets investment would soar by up to 40 per cent, and inflation would be between 16 per cent to 18 per cent.