Business / Economy

Need for economic change is key to progress: Advisers

By Chen Jia (China Daily) Updated: 2014-02-22 07:56

Fiscal and State-owned enterprise reforms will be the government's key tasks this year, with more detailed plans being discussed at the Chinese People's Political Consultative Conference and the National People's Congress sessions from March 3, said top policy advisers.

Reforms in those two fields are crucial to improve the overall economic structural transformation process after it enters the key stage, as well as to avoid a sharp slowdown of growth, they said.

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Zheng Xinli, former deputy director of the Policy Research Office of the Chinese Communist Party Central Committee, called the fiscal reform the "main force" to shift the investment-oriented growth pattern into a consumption-driven one.

Fiscal measures, including interest subsidies, capital allowances and tax reductions, can be efficient for leading the investment of social funds to support the development of targeted industries. "It will by then increase job opportunities and maintain social stability," Zheng said.

Zheng expects the government will maintain a proactive fiscal policy and prudent monetary policy this year by formally writing down the stance in the annual government work report for the National People's Congress session, which is planned to be released on March 5.

However, the government may face the difficult situation of tightening fiscal expansion or lowering the fiscal deficit this year because fiscal income is likely to shrink, influenced by moderate economic growth, according to He Keng, former vice-chairman of the Financial and Economic Committee of the National People's Congress.

"We expected a slower growth in the real estate industry this year, which will reduce local governments' tax income and even restrain all economic expansion," He said.

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