Local governments in China get strong push to reform

By Xie Jun Source:Global Times Published: 2019/10/16 21:58:40 Last Updated: 2019/10/16 23:38:42

Changes must take place despite downward pressure, experts say


A worker sets up scaffolding at a construction site in Beijing on Wednesday. Photo: AFP



At a moment of mounting challenges from external friction and internal structural transition, there are good opportunities for local governments in China to carry out reforms, something that the central government is also pursuing with all of its strength, experts said on Wednesday. 

China should attach more importance to the task of stabilizing economic growth and keeping the economy operating within a reasonable range to withstand downward pressure, Chinese Premier Li Keqiang said at a forum in Northwest China's Shaanxi Province on Monday. 

According to Li, China's economy is facing "multiple challenges and difficulties" these days, with problems emerging such as weakening domestic demand, rising prices for certain types of food and lack of growth momentum in some areas. 

"The pressure partly comes from external conditions, including the China-US trade war and the deteriorating global economy. Those pressures are increasing as progress in trade talks and the world economy are below market expectations. China's internal economic transition also adds to such economic difficulties," said Li Chunding, a professor at the College of Economics and Management under the China Agricultural University.

But it is these difficulties that are pushing the Chinese government, from the top to local levels, to carry out reforms, said Cong Yi, a professor at the Tianjin University of Finance and Economics.

"When challenges were not so obvious, local governments might lack the impetus to change. Now, reforms are pressed to accelerate. There might be differences in reform speed but the direction is clear," Cong said 

At the forum, Li pointed out steps that local governments should take to cope with the situation. For example, they should make good use of local government bonds. Local governments must also nurture new consumption growth points in commodities and services, and energize the online and physical markets in urban and rural areas.

Li also stressed that China should thoroughly implement existing policies such as tax and expenditure cuts, and use macroeconomic policies and countercyclical adjustment tools in a flexible manner.

Li Chunding stressed that the Chinese government has done everything it can, including opening-up reforms and tax cuts, to boost the economy. 

"Although there are flaws, such as a persistent shortage of focus on private and micro-sized businesses, those policies have been effective, and so far China's economy shows an improving trend," Li Chunding said, adding that China's half-year GDP growth, 6.3 percent, is still "high growth."

Industrial shift 

Premier Li also pointed out that local governments should support the shift of industries to western and central China from other regions.

"It is happening that many of China's industries are shifting from coastal areas to central areas, which has helped boost the latter's economy. This is reflected in the rising trade and GDP data of many inland provinces recently," Li Chunding said. 

Many central and western provinces in China achieved above-average GDP growth in the first half of this year. Central China's Hunan Province achieved GDP growth of 7.2 percent and Central China's Hubei Province recorded GDP growth of 8 percent.

But problems exist, Li Chunding said. "For example, the shift of industries often concentrates too much on the provincial capitals or relatively bigger cities, with smaller regions still lagging behind. Also, I've heard companies complain about a lack of tangible preferential policies for such an industry shift," Li Chunding said. Shortages of housing and other facilities also pose problems. 

According to Cong, it is very important that some local governments in China reform their administrative systems to become more efficient, user-friendly and low-cost. "Opportunities won't happen just because of waiting. They must actively innovate and reform to keep pace with China's general economic transition."
Newspaper headline: Local governments get strong push to reform



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