Efficient use of new stimulus plan key to national rejuvenation
Source:Global Times Published: 2013-3-2 0:08:01
Foreign media has reported that China plans to invest 40 trillion yuan ($6.4 trillion) in bringing 400 million people into cities in the next decade. The report quoted a Chinese expert as saying that the urbanization program "would be funded by a major expansion of bond markets," which will "push the domestic capital market liberalization agenda."
In 2008, China announced a 4-trillion-yuan stimulus package to boost the economy. While it did help prevent a possible economic recession, the colossal stimulus package also had side effects, such as inflation. Some believe China's soaring housing prices were also caused by the plan.
The reported package is 10 times the 2008 one, and would be the most ambitious national investment plan in the world over the next decade. It would ensure China's sustainable and rapid economic growth, make a historic contribution to the improvement of Chinese living standards, and benefit the world economy.
But it remains unknown whether the program will bring a mature capital market and industrial structure or further exacerbate old illnesses. The challenge, which the Chinese economy will have to face in the next 10 years, is pivotal to China's blueprint in the 21st century.
China's government-led urbanization has to be upgraded. The authorities should provide policy guidance and help create an urbanization drive. But more detailed tasks should be left to market forces, which will bring vigor and strength into newly established cities and towns.
The new stimulus package should help nurture a great number of small and medium-sized enterprises. If State-owned enterprises are always prioritized in government investment, the unfair nature of the market environment will be further consolidated.
Corruption has permeated government spending at the local level in recent years, and it is disturbing to think about how corruption can be curbed while urbanization is carried out in the next 10 years.
All these things pose huge challenges to how to efficiently and effectively spend the astronomical stimulus package. The principle of being practical and down-to-earth should be upheld, and investments in specific projects just for political show, face or other elusive reasons should be avoided. This is a serious lesson that China must draw after years of experience with the market economy.
If this 40-trillion-yuan urbanization package can be implemented well, we will be living in another "new China" after a decade, which will be remembered by history for its contribution to China's national rejuvenation.