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Stabilize Macro-policy and Vigorously Prompt the Reforms in Related Areas


Liu Shijin Yu Bin Li Jianwei Zhang Liqun

The year of 2011 will be the outset of the 12th Five-year Plan period. With the economic performance returning to the orbit of regular growth in the main, advancing the readjustment of the economic structure and the change of the mode of development has become a formidable task. When significant changes are taking place in the relationships between economic growth and employment, the pressure on the macroeconomic policy of sustaining growth to ensure employment will ease. Hence, fiscal and monetary policies for 2011 should be aimed at gradually realizing their stable transition from the fight against the crisis to the roles played as regular policies, and the policies should be kept relatively stable. Greater efforts should be put in prompting the reforms in related areas and in making substantial progress in the readjustment of the economic structure and the change of the mode of development.

I. Fresh Recognition of the Relationships between Economic Growth and Employment

Through more than 30 years of sustainable and rapid development, the "primary aspects" of the economic performance in China have been changing. In terms of the motive power behind the economic growth, the change from excess dependence on export and investment to higher dependence on consumption growth and from the dependence on fast expansion of the manufacturing industry to higher dependence on the growth of the service sector will inevitably produce impact on the pace of the economic growth and the gradual reduction of the latent growth rate will be unavoidable. In terms of the labor supply-demand pattern, in recent years the urban employment has increased an annual average of approximately 4%, with the number of newly-increased jobs being equivalent to that of fresh urban and rural labor supplies on the whole, thus greatly easing the pressure of excess aggregate labor supply. The above-stated changes signify important changes in the relationships between economic growth and employment. The pressure on the macroeconomic policy of sustaining growth to ensure employment will ease. The policy should be targeted at placing more importance on readjusting and optimizing the economic structure and improving the quality of the economic growth while maintaining the growth at a necessary speed and should be aimed at energetically responding to new circumstances and issues arising from the slowdown of the growth and the continuous rise of the labor cost and making efforts to nurture and enhancing the level of corporate profitability.

II. Accelerate the Pricing Reform and Rely on the Market Mechanism to Forward the Readjustment of the Economic Structure

The distortion of the prices of resources and production factors has failed to fully reflect the scarcity and the market supply-demand situation, becoming a serious obstacle against the readjustment of the economic structure and the change of the mode of development. We should act according to circumstances to prompt the reform of the interest rates, exchange rates and prices of resource products. Currently in China, the deposit rates in real terms are negative, the interest margin between deposits and loans is big and it is for most part difficult for medium-and small-sized enterprises to get the financing. Therefore, we can consider raising the deposit rates moderately and should actively facilitate the formation of the market-oriented deposit rates and widen the fluctuation of loan interest rates. Moreover, on the basis of further strengthening the differentiated export rebates and tariffs, we can widen the fluctuation of RMB exchange rates properly and give more play to the roles of the exchange rates in optimizing and readjusting the export structure in a comprehensively regulatory way. We should further straighten out coal and power prices, improve the pricing mechanism of natural gas and oil products and gradually increase the prices of water for non-agricultural use.

III. Boost the Reform of the Income Distribution System and Take Vigorous Action to Expand Consumption

Boosting the reform of the national income distribution system and increasing the income of low-income groups is an effective way for expanding consumption. The selectable policies include: conscientiously carrying out the Labor Contract Law, earnestly safeguarding workers' legitimate rights and interests and reasonably increasing the minimum wages; expediting the transfer of land in rural areas, facilitating the innovation on transfer and substitution of house sites and enabling farmers to reasonably share earnings from appreciation of land value; actively advancing the experimentation of levying building taxes and intensifying the efforts in adjusting the taxes on property stock among high-income groups; increasing the ratio of government expenditure on public services and on transfer payment for people's well-being to aggregate government expenditure and focusing more of the government spending on offering public products and services to all citizens and on raising the income of low-income groups.

IV. Expedite the Formation of the Effective Mechanism for Energy Conservation and Emission Reduction

During the 11th Five-year Plan period, great achievements have been made in energy conservation and emission reduction and the mechanism facilitating the energy conservation and emission reduction has initially taken shape, yet the mechanism needs further improvement. Things that have happened recently indicate that energy conservation and emission reduction are still highly dependent on administrative management and that drawing on administrative order and the sweeping approach to control energy consumption has generated some negative effect, which is hard to continue and is easy to incur inappropriate restraints against the development of some regions. We should, on the basis of the market and according to the differences in resources, industrial structures and development stages of various regions, distribute targets in a fairer and more reasonable way, actively explore mechanisms conducive to realizing the structural optimization, technological progress and gradual reduction of resource consumption and pollutant discharge and constantly consolidate and enhance the achievements and efficacy of energy conservation and emission reduction. We can refer to standards for energy consumption and pollutant discharge followed by different industries of various countries and gradually set up the energy consumption and emission reduction rules and regulations for all trades and professions to put a premium on the advanced and weed out the backward; we should rely less on administrative measures and should take vigorous action to create conditions for experimenting on emission trading.

V. Reform and Improve the Examining and Approving System of Investment Projects

We should reasonably divide the power of examination and approval between the central government and the local governments and lay emphasis on giving play to the supervising functions of local governments over local projects. The government administration over investment projects should be focused on the examination and verification of the qualifications for environmental protection, energy consumption, safety and quality standard and the two-way supervision (The project not coming up to standard, the government will supervise the project;the project coming up to standard yet not being approved, the enterprise will supervise the government) should be put into practice. We should change the fact that protecting the backward capacities by simply proceeding from the capacity size to bring the construction of new projects under control will suppress the role of the market competition in dynamically optimizing the capacities. We should formulate regulations on administration over approval and record of investment projects.


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