Stimulate economy through reform

Reform is the best stimulus for the Chinese economy, an article of the 21st Century Business Herald said. Excerpt:

Premier Li Keqiang stressed at an international economic forum held in Hainan province that his government will not resort to a strong short-term stimulus, because of temporary volatility.

The downward pressure on the Chinese economy is evident, as shown in China’s trade performance last month. Imports declined 11.3 percent, and exports were down 6.6 percent.

It is right for the Chinese government to focus more on mid- and long-range healthy development of the economy. As long as there are enough jobs, the economy’s fluctuation can be deemed within a reasonable range.

The service sectors have increasingly become major job providers and a main driving force for the Chinese economy. The decline of labor-intensive manufacturing industries, which used to be the pillar of China’s exports and employers, will not seriously affect employment.

There is still a mild shortage of labor in the job market now, and the earnings of workers is on a growth track. Unemployment among China’s college graduates can be solved gradually by the growing higher-end service sectors.

Increasing government stimulus spending will not necessarily create new jobs. Premier Li’s stance shows the Chinese government’s resolve to deepen reforms.

Public welfare is a key area that the government should increase its input — not only pure capital investment, but also institutional reforms.

The State Council’s decision to cut taxes for small private enterprises, building more government-subsidized houses and constructing more railways in the central and western China, demonstrate Premier Li’s view that the government’s macrocontrol should coordinate with the needs of improving people’s lives and creating jobs.

Meanwhile, the government needs to further cut red tape and improve its working efficiency to let the market and society play their due roles in national development.