For a period of time the Central Committee of the CPC and the State Council have resolutely adopted a series of macro-control measures for readjusting economic structure, transforming the mode of production growth to curb the over-quick growth in some sectors of the industry.

At present we've witnessed that in some industrial sectors, a continuous optimization of structures is being carried out in the course of readjustment and the overheated investment and production growth are on the decrease.

Growth rate of fixed assets still a bit too high

Ever since last year in the meantime when the development of Chinese economy was speeding up there have appeared some striking contradictions and problems focused on the over-quick growth of fixed assets investment and extra-large scales in construction, that affected the quality of economic growth. However, positive changes have now taken place when the national macro-control policy was carried out.

The price of the screw-thread steel when climaxed in last February began to fall week by week and during the five weeks of April 9 to May 21 the price had seen a drop of RMB 944 yuan/per ton, a weekly average downfall of 200 yuan/per ton. The projects for electrolytic aluminum that are still underway for construction have been brought to stop or put back one after another with the overheated investment in this sector put by and large under control.

From January to May, among those fixed assets investment projects of over 5 million yuan, the growth rate of iron and steel, cement and aluminum is now lower than that of last year. And the economy in these sectors developed towards the expected goal as required by the macro-control policy.

Investment structure still not rational

Notwithstanding, fixed assets investment in part of the sectors and regions is still increasing a bit too fast. In the previous 5 months, among those fixed assets investment projects of over 5 million yuan the growth rate of the iron and steel, cement and electrolytic aluminum came respectively to 76.6, 55.3 and 38 percent, keeping on a relatively high increase.

The continuous fast investment increase in the overheated sectors has caused a short supply of energy. The social coal storage has dropped to the lowest level as in the past 20 years and the shortage of electricity in the 3rd quarter of the year is possible to exceed 30 million kilowatts. The rate of the railway carriage supply came only to around 35 percent of the required volume in the previous five months and there appeared such cases as ships being retarded in coastal ports as never happened in many years before.

In the financial sector, the monetary credit is still being operated at a high level. By the end of last May the balanced loans in all banking businesses witnessed a rise of over 19 percent, and especially we saw more such increases in the medium-and-long-term loans.

For the moment we still see a big increase in the fixed assets investment and the existing striking contradictions and problems are still there, not radically solved. The irrational investment structure remains particularly an outstanding problem and we are facing a hard job ahead in carrying out the macro-control task

For the moment we are facing two "emphatic points" in the macro-control, pointed out experts: the one is to "prevent from heating up", setting a curb on the over-quick increase of investment in certain sectors. And the other is to help "raise temperature", strengthen the support for the weak links in agriculture, communications and energy resources.

From January to May, the investment in primary industry saw only a growth of 11.7 percent, the secondary up to 47.8 percent while the investment in the tertiary industry, a rise of 27.7 percent. Of the major industrial products, over 80 percent are faced with shortage or even serious shortage in productive capability. Besides, the relationship between the investment and consumption are uncoordinated with the growth ratio in investment telling high while the consumption a bit low for a long time.

Therefore, at a time when we are clearing up the fixed assets investment projects and strengthening the macro-control over them it's the high time for readjusting and optimizing the investment and economic structure.

Person in charge concerned with the authoritative economic sector said, the next step we are going to take is to implement all macro-control policies and measures as set by the central Party and government. That is to put a check on the blind development of some overheated sectors and industries, while supporting for the normal capital flows and loans of the enterprises having their own markets and yielding benefits. To support the construction projects that are in conformity with the state industrial policy and market accessible conditions will help maintain the speed of development, raise the development quality and strengthen the aftereffect in the development.

(People’s Daily July 1, 2004)