Fears over pace of expansion dismissed

THE heady pace of economic growth in Shanghai will not lead to adverse effects despite signs of the economy overheating, according to a municipal official.

Mr Xu Zhiyi, vice-director of the Economic Committee of the Shanghai government, admitted that the problem of overheating existed, already posing a heavy burden to enterprises.

''But we are confident about solving the problem. We need to keep an eye on that. But that's not the major issue,'' he said.

Mr Xu, a Shanghai delegate attending the NPC, dismissed fears that the rapid pace of economic growth would accentuate problems such as inflation and the shortage of raw materials.

He noted that the average income of people in the metropolis had jumped 25 per cent last year, adding the real figure could be higher because of under-reporting.

The industrial growth rate had shot up at a much higher rate.

He maintained that reforms on the operation of enterprises had rejuvenated the enthusiasm of the management, as well as workers.

Since enterprises were allowed to pocket the profits after contributing their part to the Government, he said, they were more enthusiastic about taking measures to boost their production.

''In the beginning, people were afraid that the profits of the Government would be reduced under such a system. The contrary is truer now. As more wealth has been created, everybody got more,'' Mr Xu said.

''There can only be economic development when there is an internal driving force to push production forward.'' He noted that workers' enthusiasm would be unleashed with wage reforms.

''Those who perform better must be treated differently from those who do not by different arrangements such as bonus,'' he said.

Mr Xu admitted that the income gap in the country would widen and there might be social problems.

He added that a comprehensive social security system and employment service would help cushion against public discontent.

Mr Xu said the key to developing a market economy was to change people's deep-rooted concepts.

Another deputy, Mr Wang Peizhou, a deputy manager of the state-owned Baoshan Steel and Iron Works, said the country was faced with both ''an opportunity and a challenge''.

The plan of the central government to boost the output of raw materials such as steel would boost industry, he said.

But on the other hand, a market economy would gradually push up the prices of raw materials and thus increase production costs.

Another deputy said rural areas which were more closed to the outside world because of transport and communication weaknesses would find it more difficult to compete in a market-oriented economy.

The mass exodus of workforce, particularly science and technology skilled workers, to the cities had impeded the development of rural economies, he said.