Chinese Premier Plans to Double Gross Domestic Product by 2010Beijing To Post Deficit Spending For Fourth Year
By Anthony Kuhn
Special to the Los Angeles Times -- BEIJING
Maintaining heavy government spending, China will attempt to double the size of its economy by the end of the decade, Premier Zhu Rongji told the annual session of China’s legislature Monday.
Zhu’s forecast was part of Beijing’s 10th five-year economic and social plan, a format held over from China’s command economy, which was submitted for the approval of the National People’s Congress.
“In the near future, we will continue to implement an active fiscal policy to increase investment and stimulate consumption,” Zhu said.
That policy will require Beijing to enter its fourth year of deficit spending, issuing long-term treasury bonds this year worth $18.1 billion, roughly the same amount as last year. The bonds will bankroll massive infrastructure projects, including gas pipelines, a new railroad to Tibet and a project to divert southern rivers to China’s arid north.
Finance Minister Xiang Huaicheng is expected Tuesday to announce a budget with a record deficit of more than $30 billion, up 4 percent over last year. That shortfall amounts to 2.7 percent of the country’s gross domestic product, a gap that economists still consider low by international standards.
Zhu forecast 7 percent growth per year between 2001 and 2005, significantly lower than the country’s average of 8.3 percent over the past five years. China aims to double last year’s GDP of $1.1 trillion by 2010.
“There should be no problem maintaining 7 percent growth. That’s a low target,” said Chinese Academy of Social Sciences economist Zuo Dapei. “In the U.S., a negative growth rate means recession. In China, a growth rate of 5 percent is a recession,” he said, citing popular expectations of improved living standards and noting that China maintained higher growth rates even in the deflationary depths of 1999.
China’s exports and its consumer price index rose 0.4 percent last year after declining for two years.