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China's macro-economic control policy fruitful Ma asserted, however, that these initial achievements are merely the first stage, and that more must be done to meet the requirements set by the central authorities to strengthen and improve macro-economic control. Ma delivered a report to inform the Standing Committee of the 10th National People's Congress for the annual plan on national economic and social development. This year, all localities have adopted more direct measures to support the agricultural sector and are witnessing a major turning point in grain production, as the acreage of grain-growing farmland is expected to surpass 100 million hectares. It is the first time that the acreage of grain-growing farmland has increased over the past five years. Meanwhile, the summer harvest of grain is expected to increase by 4.8 percent to 101.05 billion kilograms. Summer grain production has declined in each of the last four years. This year, the government has adopted stricter measures to rein in the issuance of bank loans and the use of land to curb the excessively fast increase in fixed capital. The central bank has increased the reserve fund of commercial banks by 0.5 percentage points, following one percentage point growth last year, Ma said. The government launched a six-month campaign to rectify the chaotic land market and stop illegal use of farmland for non-agricultural purposes. The government has also tried to curb blind and inefficient investment in heavy industries such as steel, aluminum and cement. The government's macro-economic control efforts have paid off. In the first seven months of 2004, China witnessed drops in investment in steel, aluminum, cement and real estate of 57.6 percent, 39 percent, 40.4 percent, and 12.5 percent, respectively. Thanks to the government's efforts to increase energy production, the outputs of electricity, coal and diesel oil increased by 15.2 percent, 14.8 percent, and 21.3 percent, respectively. Railway transport went up by 8.6 percent, owing to policies to increase the shipment of energy products. Currently, the country's grain market has remained stable as inflation pressure has been eased to a certain degree. During the first seven months of the year, consumer prices increased by 3.8 percent. In his report, Ma emphasized some major problems in the country 's economic field. In the first seven months of 2004, 139,400 building projects were under construction across the country, with a total investment of 11.2 trillion yuan (US$1.35 trillion), up 14,500 and 38.1 percent, respectively. Meanwhile, the increase in the issuance of bank loans still remained as high as 29 percent by the end of July. The supply of energy for thermal power plants still lags behind as many large thermal power plants' storage of fuel could meet demands for less than 10 days. Blind, inefficient and overlapped investment has also led to the stockpiling of major industrial products, Ma said. In the first six months of 2004, stockpiles of steel, nonferrous metal and transport equipment manufacturing sectors increased by 74.2 percent, 35.1 percent, and 7.8 percent, respectively. The decrease of bank loans has led to the shortage of flowing funds for industries, small industries in particular. In the first seven months of 2004, the amount of short-term loans fell by 170.6 billion yuan (US$20.55 billion), while the amount of bond-financing dropped by 242.6 billion yuan (US$29.22 billion). This has caused a rebound of illegal fund-raising activities in some areas. The growth of bank savings has declined for six months in succession. |
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