Problems can't dim bright economic outlook

LI MIN/CHINA DAILY

Despite facing numerous difficulties and challenges, such as relatively serious structural overproduction, China's economy still boasts good fundamentals with huge development potential, strong resilience and a huge room for self-adjustment. If China coordinates its policies well, nothing can stop it from boosting its economic growth.

The Central Economic Work Conference in December pointed out that China should expand domestic demand by increasing and raising the quality of supplies. In doing so, the top authorities hit the nail on the head, because there are several examples at home and abroad of consumption being boosted by effective supplies, such as the iPhone in the United States and high-speed railways in China.

Because high-speed trains are safe, comfortable and fast, they are being favored by an increasing number of Chinese passengers as a mode of transport; high-speed railways have also become a new symbol of China for the rest of the world. The construction of high-speed railways in China is based on the demand insufficiency theory of the Keynesian school of economics.

Although high-speed railways have fueled genuine demands, some people are still concerned that China's campaign to do away with backward production modes and source new supplies could cause repercussions in the market. But such concerns are unwarranted, because the campaign is basically similar to the previous one to promote industrial upgrading.

China's efforts for industrial upgrading have been bearing fruits in recent years. Numerous enterprises have emerged in a variety of fields on the strength of advanced technologies. For example, Huawei has become a tech giant because its telecommunication equipment are world class. The company has also made huge progress in cellphone technology.

Also, Chinese enterprises are emerging as big players in electric vehicle manufacturing. For instance, at a recent contest in Melbourne, Australia, a luxury travel bus developed and made by a Chinese automaker created a Guinness world record by proving it can travel 1,018 kilometers after charging just once.

Besides, China's "Internet Plus" strategy has proved very successful and still has a lot of potential for further development. For example, companies offering vehicle-hiring services with the help of the Internet have considerably lowered the transport costs for ordinary passengers and, to some extent, mitigated the pressure on public transport.

Therefore, in its bid to eliminate backward overproduction, China should not resort to a rigid approach. True, serious overproduction in certain sectors such as coal and steel are yet to be addressed. But that does not pose a big problem to home appliance and electronics enterprises, because they can transfer their overcapacities from the saturated eastern region to the less-developed central and western regions. Also, there is no need to worry about overproduction in textile and shoe-making sectors, because many of them have been transferred to Vietnam and African countries. That the overcapacities in these sectors can be transferred makes it unnecessary to continuously try to offload them.

Although some of China's traditional sectors face difficulties, some emerging enterprises are booming. So, whether the government can create a macro-economic policy environment for their further development will be key to whether they can realize smooth upgrading and transformation.

Since many domestic enterprises have encountered financial difficulties-or their high costs have seriously restricted their development-the Central Economic Work Conference's promise to lower the costs is very important, as the temporary difficulties many domestic enterprises face can be traced back to their high costs in most cases.

To effectively increase supplies, China should try to increase government supplies-apart from making efforts to increase those by enterprises because the supply of public products by the government will boost the country's economic development.

The author is a researcher with the School of Economics, Renmin University of China.