|
It's hard for China to achieve high growth. Li said China's foreign-related sectors are first affected by the weak world economy. In 2011 the proportion of China's trade surplus in its GDP was lower than 3 percent, against more than 6 percent at the highest.
"At the G20 Seoul Summit held in November 2010, the other 19 countries forced China to reduce the proportion of trade surplus against its GDP to below 4 percent. At that time we were not sure about this target, so we did not promise. Now the proportion has been lower than 3 percent and we estimate it will be a long-term trend," Li said.
The need for significant adjustments to macro-economic policies in 2012 is a major concern that has aroused heated arguments. The blue book thinks China should maintain the proactive fiscal policy and the moderate monetary policy.
Chen said experts and scholars are optimistic about China's economic policies. As for the fiscal policy, since China is carrying out economic restructuring and the proportion of national debt against GDP is controllable, it is reasonable to adopt the proactive fiscal policy.
However, the government needs to strictly control the scale of fiscal deficits and the balance of national debt, particularly to strengthen supervision of local government debts. China also needs to optimize the structure of fiscal expenditure and fully play the role of the fiscal policy in improving people's livelihood and economic restructuring. The government should accelerate steps of structural tax reduction, alleviating the burden of enterprises and strengthening fiscal policies supporting small and micro enterprises in order to promote the rapid development of small and micro enterprises.
Li Xuesong, Deputy Director of the CASS Institute of Quantitative and Technical Economics, said in 2012 the international economic environment will be more severe. Particularly, there is no effective solution for the debt crisis in the United States and Europe. Further, domestic inflation pressure is eased but there are still some uncertainties. Therefore in 2012 China should continue the proactive fiscal policy and moderate monetary policy and make slight adjustments to ensure steady economic growth.
Li said there are three key points for China's economic policy in 2012. First, the country should continue the proactive fiscal policy and strengthen the efforts of structural tax reduction. The government should rapidly solve the problem of double taxation that restricts the development of the service sector and formulate a fiscal policy that can promote the development of strategic emerging industries.
According to Li, at present the tax burden of small and medium-sized enterprises (SMEs) is heavy, therefore the government should expand the favored income tax policy toward some small-size and low-profit enterprises in order to support the development of SMEs. The policy of structural tax reduction can also increase the actual income of residents, boost consumption and improve the economic structure.
Second, China should continue its moderate monetary policy and a reasonable growth of credit and liquidity. "Appropriate slight adjustment has actually started, for our deposit reserve rate has been lowered," Li said.
In 2012 China should continue to observe international economic trends and domestic economic growth, inflation, employment and balance of international payment, with the aim of coordinating adoption of different monetary policy tools, promoting reasonable growth of credit and liquidity and maintaining steady economic growth. In the meantime, China should promote the market-oriented reform of the interest rate mechanism and the transfer of the renminbi exchange rate mechanism to a two-way floating one, deepen the reform and opening-up of financial institutions and support the development of financial institutions serving small and micro enterprises.
Third, China should, while maintaining steady economic growth, deepen the reform of the resource price mechanism and accelerate strategic economic restructuring and the transformation of economic development pattern. According to Li, from the 12th Five-Year Plan for various industries issued in 2011, we can see that in the future China's economic policy will focus on accelerating economic restructuring and promoting the development of strategic emerging industries.
Agriculture is still the focus for China. The CASS blue book says the economic policy will focus more on consolidating the base for agriculture, expanding input in agriculture and rural areas, ensuring the steady development of agricultural production, especially grain production, raising farmers' incomes and narrowing the income gap between urban and rural residents.
Moreover, China will pay more attention to guaranteeing and improving people's livelihoods, and more government resources will be put into public service sectors such as employment, social security, education, health care and affordable houses.
"Although the international economic situation is very complicated, only if the government chooses proper policies will the Chinese economy maintain steady growth in 2012," Li said.
Economic Forecast
- Investment: In 2011 the nominal growth of fixed asset investment is estimated to stand at 24.5 percent, with actual growth of 16.7 percent deducting price factors.
In 2012 the investment growth rate will decline, with nominal and actual growth standing at 22.8 percent and 15.4 percent respectively.
- Consumption: In 2011 the nominal growth of total retail of consumer goods is estimated to be 16.7 percent, which is 1.6 percentage points lower than the previous year. The actual growth when allowing for price factors is 11.2 percent, 3.6 percentage points lower than the growth in 2010.
In 2012 the total retail value of consumer goods is expected to surpass 20 trillion yuan ($3.15 trillion), with nominal and actual growth of 15.7 percent and 11.3 percent respectively.
- Foreign trade: In 2011 exports and imports are estimated to grow by 20.4 percent and 24.7 percent, respectively, year on year. The trade surplus will reach $160 billion, decreasing for the third consecutive year.
In 2012 the total volume of foreign trade is expected to grow less than 20 percent and the trade surplus will further decrease to $135 billion.
(Source: China Economic Blue Book 2012) | 
