(China Daily)
Updated: 2007-12-18 10:37

If a tight monetary policy is essential to preventing the economy from growing too fast, a fiscal policy that focuses on people's livelihoods as well as energy and environmental concerns will be indispensable when the country is to continue to develop in a sound and sustainable manner.

It has been reported that the country's fiscal revenue could reach 5.1 trillion yuan ($690 billion) this year, which would be an increase of about 30 percent from last year. The swelling coffers are a natural reflection of the country's robust economic growth, which clipped along at a rate of 11.5 percent in the first three quarters this year.

However, even as the country is on target to register its fifth consecutive year of double-digit growth this year, the authorities have made preventing the economy from overheating next year a priority policy. They are also wary that recent price hikes could evolve into outright inflation.

Policymakers have tightened up the monetary policy to rein in credit growth and slow investment.

Overseas, a looming US slowdown is also expected to exert considerable negative pressure on China's exports.

To support sound and fast economic expansion amid slowing investment and export growth, the government must make more active use of fiscal policy to boost domestic consumption, an important but underdeveloped growth engine.

That means the government should continue its efforts to increase spending on education, healthcare, social security and other issues closely related to people's living standards. The lack of adequate fiscal input in these areas has long prevented consumers from loosening their purse strings.

The rapid rise in fiscal revenue - more than double the rate at which the economy is growing -has clearly put the government in a strong position to lavish money on public welfare issues.

And to ensure that the economy grows in a sound manner, we should take bolder and more effective steps to increase energy efficiency and cut pollution.

In other words, a supportive fiscal policy is needed to provide incentives for enterprises and the public to produce and consume in a greener way.

Though the revenue windfall is not yet official, it is not too early to put together a careful and comprehensive plan for how the funds should be spent.