'Cautious expenditure' plan to energise economy
A TOP Jiang Zemin adviser has vowed to boost expenditure to re-energise the economy while prescribing caution on how the extra money should be spent.
Addressing the NPC yesterday, Minister of the State Development Planning Commission Zeng Peiyan vowed to continue with reform of state enterprises. He warned, however, that an unprecedentedly large number of unsuccessful factories and plants would be axed.
Referring to the record deficit of more than 150 billion yuan (HK$139.5 billion), Mr Zeng said this was necessary to reflate the economy.
But while defending this 'proactive fiscal policy', he pledged the Government would pursue a 'prudent monetary policy'.
'We must see to it that the limited funds are put to good use and that the investment of government funds guides the investment of other funds in society,' he said.
'We must increase revenue, reduce expenditures and oppose waste and extravagance.' While the bulk of the new spending would be used on infrastructure, Mr Zeng asked governments at all levels to give equal priority to allocating adequate funds to guarantee the basic livelihood of laid-off workers.
Xinhua yesterday quoted Mr Zeng as saying further improvements in a unified old-age pension system would be made at the provincial level.
Following a new custom mandated by Premier Zhu Rongji, Mr Zeng did not give projections for foreign trade performance this year.
He said only that Beijing planned to balance its external trade this year, despite a strong slowdown in exports blamed on the Asian financial crisis.
'We should strive to increase the total volume of imports and exports and achieve a fundamental balance between them,' Mr Zeng said.
On the reform of state enterprises, the minister acknowledged that 'the economic structure is irrational and the problem of redundant development, which has plagued us for many years, has resulted in massive idle production capacity'. Mr Zeng disclosed that last year the total profit of industrial enterprises decreased 17 per cent over 1997 while the losses of failing enterprises increased 22.1 per cent.
'The number of workers laid off from state-owned enterprises is on the increase, putting added pressure on employment efforts,' he said.
The report proposed to adopt measures to 'further readjust and reduce excessive production capacity of state-owned enterprises to improve redundant capacity and declining performance'.
Industries where the axe would fall included textile, coal, glassworks, cement, thermal power and steel plants.
The Government, on the other hand, would provide policy support for the development of small enterprises, Mr Zeng said.
'We should create favourable conditions for the expansion of small enterprises of various forms of ownership, especially new and hi-tech enterprises.' In addition, 'greater efforts should be made to encourage mergers and standardise bankruptcy procedures', he said.
