China's economic operations have taken the desired direction following the introductions of macro-economic regulations and controls.

-- Rapid economic growth has begun to slow

-- Overall prices remain relatively low despite rapid economic growth

-- The employment situation is better and the number of new jobs in urban areas is increasing

-- The bottleneck in the supply of coal, electricity and transport has eased as the external environment has improved

-- Manufacturing and marketing are more closely linked to the growth of profits and revenue

This year the economy has shown very good momentum. The annual GDP growth rate is expected to exceed 10 percent, which will make 2006 the fourth consecutive year in which it has been higher than 10 percent. The maintenance of steady and rapid growth is very important for the fulfillment of the objectives of the 11th Five-year Plan. To discuss economic operations, Wang Yiming, deputy director of the Academy of Macro-economic Research (AMR) of the National Development and Reform Commission (NDRC), accepted an exclusive interview with People's Daily.

Economic operations developing as expected

Q: What is your assessment of current economic operations?

Wang: Economic operations are moving in the desired direction following the introduction of macroeconomic regulations and controls, which is visible in the following areas:

Firstly, economic growth remains at a high level, but has slowed a little. The GDP growth rate in the first half of the year was 10.9 percent; in the second quarter, 11.3 percent. In the third quarter it fell 0.2 percent to 10.7 percent.

Secondly, despite the high economic growth rate, prices overall remain at a relatively low level. In the first three quarters of this year, China's consumer prices rose 1.3 percent against the same period of last year, remaining modest. The annual consumer price growth rate can be controlled at 1.5 percent or less.

Thirdly, the employment situation is better with more new jobs being created in urban areas. In the first three quarters, a total of 9.32 million new jobs were created in urban areas, surpassing the target 9 million new jobs for the year. By the end of the year, over 10 million new jobs will have been created in urban areas.

Fourthly, the bottleneck in the supply of coal, electricity and transport facilities continues to ease and the external environment for economic performance is improving. During the last two years, China has increased its investment in electricity and rail transport, which has helped improve the supply capacity.

Finally, enterprises are reporting a better connection between manufacturing and marketing, with the revenue of industrial enterprises growing by a significant margin. In the first three quarters, industrial enterprises reported a 29.6 percent growth in profits, an increase of 9.5 percentage points from the same period of last year. The national fiscal revenue has also grown substantially.

The problem of the relatively fast growth of investment has not yet been fundamentally solved

Q: At present, what are the main problems with China's economic operations?

Wang: There are several major problems with China's current economic operations: firstly, investment is still growing too fast. The problem of excessive funds has not been fundamentally resolved. Secondly, the excessive trade surplus and the imbalance of international payments have grown. Thirdly, it has become more difficult to increase the income of farmers. Fourthly, the external costs of economic growth continue to grow.

Maintaining stable policies

Q: What are the focuses of next year's macroeconomic policies?

Wang: Next year China needs to adhere to prudent fiscal and monetary policies.

While it continues to maintain investment in necessary infrastructure construction, the government should allocate more money from its budget and bonds to basic education, public health and other public services. It should improve the role of investment in promoting independent innovation, put more into social security funding, step up the construction of new rural areas as well as the central and western regions, and increase investment in resource conservation and environmental protection. Investment growth in these areas will not lead to a social investment rebound.

In terms of monetary policy, China should continue to curb the excessive growth of credit and optimize the loan structure. In line with changes to economic operations and investment, the country should raise deposit and loan interest rates, open market operations and increase the banking deposit reserve ratio, so as to strengthen market liquidity management.

Meanwhile, China needs to keep an eye on the actual situation with regard to economic operations. In addition to strengthening regulations overall, it needs to implement structural reforms, improve targeted policies, and do everything possible to maintain stable and rapid economic growth.

Editor: Yan