Ma Kai: Chinese Economy Faces Six Challenges
by Paul Denlinger
Posted Dec. 5, 2003
Ma Kai, the chairman of the National Development and Reform
Commission (NDRC), which plans and overseas China's economic
planning, said that China's economy faces six challenges
in the upcoming years. In a speech in Beijing, he forecast
that China's economy would continue to grow at a rate of
7 percent next year.
The National Development and Reform Commission is tasked
to dismantle China's Marxist state-owned economy, and make
it competitive on an international basis. Following China's
joining the WTO (World Trade Organization) in 2001, it has
taken on a role as important as the government's ministries.
Officially, the policy is known as "driving the economy
so that it conforms to market principles". Until 1977,
when China first started reform, all businesses were owned
by the state. Even after 25 years of reform, the state-owned
sector still commands 75 percent of the country's GDP.
The main challenge of economic reform in China is dealing
with the dismantling and restructuring of the state-owned
economy, and dealing with the social consequences of those
changes.
According to Ma Kai, the six challenges are:
- Rural incomes are not rising fast enough
- Some businesses and provinces have been blindly investing
in low-quality investments
- Insufficient energy and commodities to fulfill China's
needs
- Some banks have made low-quality loans which may become
bad loans
- Unemployment will go up
- Economic and social development will not be aligned
(rich-poor gap will become wider)
Ma said that some of these problems were long-term problems
which would take time to overcome. Others were short-term,
and had just arisen lately. Speaking to his Chinese audience,
he said that it was important to take a long-term view to
solving problems, and that it was always wise to be cautious,
and prepare for a rainy day.
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