Cut the price of growth

(China Daily)
Updated: 2007-03-08 07:01

Soaring real estate prices, costly drug bills and expensive education fees are all demanding attention from China's policymakers. These pricing problems demand prompt solutions since they are directly related to the nation's living standards.

Yet, for the pricing authorities, a more critical price is the cost of fast economic growth.

Ma Kai, minister of the National Development and Reform Commission (NDRC), stressed at a press conference yesterday that China is paying too much for its fast economic growth.

Clearly, the remark shows that the economic planner has not been carried away by the remarkable economic progress the country has achieved. China's gross domestic product (GDP) soared by 10.7 percent last year while inflation remained low and industrial profits and tax revenues rose considerably.

At the same time, the price of such sizzling economic growth - namely, the energy and resource costs - was also high.

In the government work report delivered on Monday to the National People's Congress, Premier Wen Jiabao admitted the failure to meet last year's energy saving and pollution reduction targets.

The government has set the goal of cutting energy consumption per unit of GDP by 20 percent and major pollutants' discharge by 10 percent in the 11th Five-Year-Plan period (2006-10).

But no decreases were achieved in either area, despite unprecedented efforts.

In retrospect, the country's slow industrial restructuring and the excessive growth of energy-consuming and polluting industries were primarily to blame.

As the country's pricing authorities and macroeconomic planners, Ma and his ministry need to assume a greater role in lowering the price we have to pay for sustained economic growth.

On the one hand, the NDRC can speed up reforms of the pricing mechanisms for energy and resource products like oil and electricity. Only a flexible, market-based pricing system can allow the price of such products to fully reflect their supply and environmental cost.

On the other hand, the economic planner can adopt a much stricter standard on energy saving and environmental impact when approving new investment projects.

Action on both hands is called for.

(China Daily 03/08/2007 page9)