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Pricing reform must start with SOEs

By Hong Liang ( China Daily ) Updated: 2012-12-29 08:05:26

By now, every keen student of the Chinese economy must have given some serious thought to economic restructuring that places special emphasis on boosting domestic demand.

This is not a new concept. But the urge to achieve a more balanced and sustainable economic growth has assumed a new urgency at a time when overseas demand for Chinese products is severely depressed by the global economic slump because of the stuttering recovery in the United States and the nagging sovereign debt crisis in Europe.

Although China has averted a dreaded economic hard landing, its growth, impressive as it may seem, was largely driven by domestic capital formation, resulting in investments in some infrastructure projects that are widely considered wasteful. What's more, the continuous flood of investment capital, generated by the plentiful supply of cheap credit, can push up inflation and create asset bubbles in many major cities.

Pricing reform must start with SOEs

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