BEIJING is trying to reassure overseas investors that its efforts to cool the economy mean neither a ''sharp brake'' nor a return of state fiats. But Chinese sources said in the wake of austerity measures already announced, that the central Government would slap further orders on localities and enterprises to whip them into line. The state-run China News Service (CNS) reported last night that the authorities had officially defined efforts to restore financial order in the rest of the year as ''[boosting] macro-level adjustments and controls''. Quoting high-placed economists and experts, CNS said attempts to strengthen macro-level tools should be distinguished from the draconian campaign of 1988 to 1991 to ''cure and rectify'' the economy. ''The programme to cure and rectify the economy was started in 1988 when problems in the economy had piled up,'' CNS quoted official economists as saying. ''The methods were [designed to] bring down the brakes sharply. They were too forceful. ''This time, macro-level adjustments and controls have begun before [Beijing] lost control. Methods used are adequate and relatively mild.'' CNS also indicated that while most of the methods used in the 1988-91 campaign consisted of ''pure executive orders which led to the stultification of reform'', the steps now being taken were ''a synthesis between executive methods and the implementationof reform''. ''Boosting macro-economic adjustments and control does not mean reform will stop,'' CNS said. ''The fundamental remedial measure is to speed up the reform of the monetary and financial systems. ''That is why the basic principle under which the economy will be run in the second half of the year is macro-economic adjustments and control in addition to pushing forward reform.'' However, Chinese sources in Beijing said that to quickly restore fiscal discipline, the State Council would ram through tough fiats in the coming weeks. For example, central authorities have just disseminated Central Document No 6 on rectifying the financial order at both central and local levels. The document sums up measures already announced, such as ordering banks of all levels to chase back or return to central coffers funds improperly lent to non-official financial institutions, local administrations or enterprises. In addition, the document said auditing, accounting and disciplinary functions of party and government organs would be boosted. Sectors deemed to be the worst overheated, including real estate and securities, would be subject to tighter central government supervision. Funds for the development of real estate, especially ''luxurious villas, halls, pavilions and offices'', would be drastically slashed. Municipal authorities of major cities including Beijing and Shanghai have issued separate orders with regard to combatting illegal and improper activities in the banking and financial sector. In today's issue, the Economic Reporter discloses four major steps the State Council will take in re-imposing central control. The Chinese-affiliated weekly quotes State Council leaders as saying Beijing will look upon the raising of interest rates as a major weapon in boosting bank deposits. It discloses that the next increase in the interest rate will not exceed three per cent. The leaders point out that the recent chaos in the monetary system, particularly ''the disorderly raising of funds'', had to do with efforts by local governments in central and western China to secure capital to ''catch up with the coast''. An end had to be put to enterprises hawking ''internal stocks'' on the open market, they said. And specialised banks must recoup funds within strict time limits that they had improperly used for investment in properties, the stock and futures market. Meanwhile, the Director of the National Intelligence Centre, Lai Guangxian, predicted yesterday that both the economic growth rate and the inflation rate would fall in the second half of the year. ''If the economic growth rate this year can be maintained at around 10 per cent, and if the rise in the retail price index can be kept within 10 per cent, it can be assured that the economy in 1994 and 1995 can expand gradually and stably, and ups and downs can be avoided,'' Mr Lai said.
