Staying the growth course

Premier Wen Jiabao's recent words on fiscal measures show that China has the resolve and the financial means to promote stable economic growth despite its current difficulties.

Recent data further suggest that the country is facing headwinds. According to the Ministry of Finance, the central government collected 6.7 percent less fiscal revenue in August than it had in the same month a year ago, an unusually large drop. Still, Wen said the country has more than 1 trillion yuan ($157.7 billion) it can put toward adjusting the economy.

Since China's growth contributes much to the global economy, it's important that international policymakers work together to combat the risk of a widespread slowdown.

The US is expected to take further quantitative-easing measures and Europe is busy devising various means of preventing the eurozone from collapsing.

Wen's vow is a clear sign that China will not let the market down and will make use of its own fiscal prowess to stop the situation from becoming worse.

Meanwhile, the country's central fiscal revenues continued to increase at a slower rate in the first eight months, going up by only 7.8 percent. That rate fell below the target of 9 percent that had been set earlier in 2012 for the period.

Still, the country, because of the surpluses it has enjoyed in recent years, remains capable of taking the stimulus measures needed to combat the current troubles.

Thus far, we have seen the announcement of plans to put more resources into infrastructure, an example of which was the National Development and Reform Commission's recent approval of various large projects.

However, the country's latest round of stimulus measures, although they protected the economy from the 2008-09 financial troubles, led to a rise in inflation and a piling up of local government debt. Taking the same path again will only make things worse.

A better way ahead lies in tapping China's domestic market.

As Vice-Premier Li Keqiang said on Wednesday, the country needs to restructure its economy.

It should push ahead with vocational education to improve the quality of its labor force.

And it should continue taking steps to encourage individual entrepreneurs in their business operations, as it is often such people who play an important role in creating jobs.

Such long-term plans should not be interrupted by policies adopted on a whim amid the current economic difficulties.

(China Daily 09/13/2012 page8)