China Deepens Strategy of Domestic Demand Expansion in the Course of Reform and Opening-up

Under the new conditions, continue to handle the relationship between speed, structure and price properly to create a favorable environment for deepening the strategy of expanding domestic demand in the course of reform and opening-up

The Central Economic Work Conference indicated that the government should focus on stable and relatively rapid growth, which is taken as the basic tone for work, in order to drive economic and social development in 2012. The government should also, guarantee continuity and stability in its macro-economic policies. It should ensure that macro-economic management becomes more targeted, more flexible and more forward-looking. The government should continue its proper handling of the relationship between stable and relatively rapid economic growth, adjustment of the economic structure and management of inflation expectations and accelerate the shift of economic growth mode and economic restructuring. With focusing on expanding domestic demand, promoting innovation, stepping up energy-saving and emission-reduction efforts, deepening reform and opening-up policies and safeguarding and improving people's livelihood, the government should ensure that economic growth continues on its stable and relatively rapid track, overall price level is kept stable and social harmony and stability are preserved. Under the new conditions, coordinating the relationship between speed, structure and price will impact on overall economic and social development, as well as on current and future development and is of great significance to doing a good job in economic work in 2012.

In 2012, sustaining stable and relatively rapid economic growth while maintaining overall price level basically stable is central to successfully handling the relationship between speed, structure and price. Economic growth should be kept on condition that overall price level is basically stable, overall economic equilibrium is achieved and the economic structure is streamlined. In the meantime, the price stability we are to maintain should be coupled with stable and relatively rapid economic and social development. However, economic growth is usually contradictory to stable prices. It is relatively easier to achieve economic growth regardless of inflation or maintain stable prices at the expense of economic growth than to achieve both at the same time. The current mixture of excessive global liquidity and grim market outlook, together with ample money stock in the domestic market provides a real challenge to the task of simultaneously maintaining stable growth and stable prices.

In order to properly address the relationship between speed, structure and price, it is imperative to expedite economic restructuring. Adjusting the economic structure will help enhance sustainability of growth, accelerate the shift from a policy-driven economy to a domestically-oriented one, and prevent wild economic fluctuations. Such an adjustment also helps to increase effective market supply, rein in unreasonable demand for energy-intensive and high-emission projects, and lift restraints imposed on the balance between overall supply and demand. It also helps to invigorate the shift and innovation of the economic growth mode, improve growth quality and efficiency and form a new pattern in which the economy is driven by both domestic and foreign demand, boosted by industries consisting of three sectors in an balanced fashion, and backed by science, technology, education and management. The fact that developed countries have enjoyed long-term advantages in economy, science and technology, coupled with the current emergence of developing economies, has resulted in a power struggle for supremacy in future economic growth. This has pushed us to accelerate the pace of economic restructuring. The changes in the internal and external economic environment will also form a drag on economic restructuring. The pursuit of development entails transformation, which is also a kind of organic growth, as well as innovation-driven development with an optimized structure. We should go with the tide and actively take the opportunity to give great impetus to transforming our growth mode and deepening economic restructuring.

The Central Economic Work Conference laid out the principal expectations and targets for economic development in 2012, and set specific requirements for shifting the economic growth mode, adjusting the economic structure and deepening reform and opening-up. Adhering to the policies set out by the central government, we should further strengthen and improve management with a focus in a firm and proper manner. The government should fine tune the economy timely and appropriately in light of situation and deal effectively with the relationship between speed, structure and price. It should also place emphasis on addressing the outstanding conflicts and problems which stem from economic growth. This can be done by playing an active, leading role in terms of guidance and planning, ensuring that fiscal, credit and industrial policies are unified, striving to meet the economic growth target and making headway in shifting the economic growth mode and economic structure. We must also ensure that conditions are conducive to deepening the strategy of boosting domestic demand in the course of reform and opening-up.