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��Home>>China Observer

Chinese economy proceeds with political influence, expert

www.chinanews.cn 2007-03-26 17:56:39

Chinanews, Hong Kong, Mar. 26 �C Chinese economy has maintained a 9%
growth rate for the past few years. The economic overheat is not the
result of economic cycle. Rather, it has been pushed by various local
government officials out of their desire to make outstanding political
achievement during their term of office, the Hong Kong based Ta Kung Pao
reported.
The statement was made by Liu Fuyuan, an economist and former deputy
director at the State Development and Reform Commission Macroeconomic
Research Institute, while he delivered a speech last Saturday at the
Tsinghua University School of Continuing Education.
Last year, China’s GDP growth reached 10.7% and Chinese economy created
jobs for 11.84 million people. At the same time, China did not have any
inflation or deflation. The macroeconomic situation was generally good.
However, compared with some developed countries, the GDP growth rate in
China was still far from high, Liu said.
Some economists often analyze the Chinese economy in light of the rules
formed in and applied to a relatively mature market. According to these
rules, they say that the fluctuations of the Chinese economy are brought
by economic cycles. In fact, China has no economic cycles. Only political
cycles function at present, Liu said.
In explaining his views, Liu said that right now, China still operates
the basic mechanism in which the government plays the dominant role.
Therefore some political cycles will arise whenever a new term of
government is sworn in. Newly elected government officials, in order to
make some political achievement, try hard to push up the GDP growth and
investment volume, regardless of market demand. The economic fever
doesn’t mean that market economic performance is already too hot. It only
shows that the government is too keen on pushing up the economy.
Sometimes, when government-dominated economy become hot, market economy
may become even more sluggish, he said.
When the central government tries to cool down the economy, it often
appears that an economic cycle has formed. On the whole, the fluctuations
occurring in Chinese economy are mostly created by political forces, not
economic forces, Liu noted.

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