Editorials

Sustainable growth path

(China Daily)
Updated: 2009-11-30 07:41

As the world's major economies ponder when and how to withdraw their stimulus policies amid an economic recovery, China has decided to continue a proactive fiscal policy and a moderately easy monetary policy next year.

The agreement, reached by the Political Bureau of the Communist Party of China Central Committee after the Central Economic Work Conference on Friday, indicates the nation will maintain continuity and stability in macroeconomic policies.

Policy continuity and stability are what the nation needs at this particular juncture as the global and domestic economic recovery is too fragile for an early exit strategy.

The US economy is not yet out of the woods, troubled by unemployment which is the highest since the early 1980s, and the possibility of a double dip recession not totally ruled out. Dubai's attempt to reschedule debt, which sent a wave of panic across the world last week, is just an example of how uncertain the market is just as investors thought the worst of the global financial instability was over.

China's economy grew 8.9 percent year on year in the third quarter, and double-digit growth is expected in the fourth. However, the recovery is not solid because the robust growth is the result of the stimulus package which is heavily investment-orientated. It is therefore commendable that the Politburo statement does not dwell on reviewing past achievements but focuses on what China should do next year to ensure a healthier and more sustainable growth pattern.

Sustainable growth path

China has never failed to surprise the world with its dazzling speed of development. However, it is high time the obsession with speed be abandoned. Three decades of rapid advancement, which relied too much on external demand and too little on domestic consumption and put too much emphasis on GDP figures at the cost of environment and social development, leaves a lot for the nation to reflect upon.

It is therefore good to see that improving the quality and efficiency of economic growth tops the five areas in which the nation will put more effort, as singled out by the Politburo statement. Next year, the final year of the 11th Five-Year Plan period (2006-10), is particularly important as favorable economic conditions are needed to set the groundwork on which the next stage of development plan will unfold.

Structural adjustments and transformation of the economic development pattern should be the focus of the year. If not better prepared, China's economy could face severe challenges as the effect of the $586 billion stimulus package gradually fades, and if the situation demands monetary policies be tightened.

As the economy begins to recover, the country is in a better position than a year ago when structural adjustments were put forward at the Friday meeting. It should seize the opportunity to make palpable changes in the structure of industry, consumption, investment and income distribution. Improved social security and public service including healthcare, education and housing will boost consumer confidence, which will be conducive to not only economic growth but also social harmony. A new structure should take shape so that the nation will have better chances to withstand economic crises.