Commentary: Stimulus package no solution to long-term development

Special Report: Boao Forum For Asia
2009

By Xinhua writers Zhu Yifan and Chen Yongrong

BOAO, Hainan, April 19 (Xinhua) -- When the world's
third largest economy is walking out of the shadow of economic downturn, it has
found more problems that demand to be immediately addressed when looking into a
long-term picture.

Government and business leaders attending the Boao
Forum for Asia, a platform for regional cooperation, agreed that the crisis will
be over, but China can not return to the former export-oriented development
pattern that depends on the demand in the United States and Europe. Those days
are over, and now the country should learn to walk with both legs -- domestic
demand and exports.

When unemployment rate started to rise, the
government adopted the 4-trillion-yuan stimulus package at the end of last year.
It is true that government-sponsored infrastructure projects have created jobs
for construction workers, but what will they do when the projects are over?

The stimulus package can not replace a long-term
strategy for the country. With 1.3 billion people, China needs sustainable
economic growth. Growth creates jobs. Jobs mean stability.

But where can China find the key to sustainable
growth and stable employment? This question defies a *** answer.

As an emerging economy on the way of
industrialization and urbanization, the situation is extremely complicated and
diversified across the nation. However, the bottleneck that affects robust
economic growth is more or less the same in many areas. To break them will
definitely unleash enormous driving force for the economy.

The small and middle-sized enterprises (SME) in the
private sector have sparked unprecedented economic boom since China adopted the
reform and opening-up policy in 1978.

From Huawei to UTStarcom, from Baidu to Alibaba,
these players -- not state-owned industrial giants -- are often fighting at the
frontier of reform and development. As effective and efficient players in
Chinese economy, the SMEs have been offering stable jobs for China's
ever-growing labor force.

However, when the financial crisis comes, bank
lending often goes more to larger state-owned enterprises instead of the SMEs,
and the latter are often the first to go bankrupt. This is unfair, and
definitely hinders the healthy development of the economy.

Reforms are already underway, and this problem should
be addressed with concrete measures from both the government and the banking
system.

Another way to make China's human resources better
contribute to the economy should be the development of service industry. Instead
of *** things, people can do things to make money. More boosts should be
given to information technology, telecommunications, medical care and education.

These sectors, rather than traditional factories,
will give a platform for China's huge number of college graduates, who get the
opportunity of using their education to make money and create wealth for the
country.

The lack of talents in key fields such as the
financial sector and management also restricts the development of the national
economy.

Good practices have been made in larger and
state-owned companies. Ever since 2003, China's State-owned Assets Supervision
and Administration Commission (SASAC) have started recruiting executives for
China's state-owned enterprises (SOEs).

The application was open to top talents worldwide,
and some of the SOEs even cancelled limit to the nationality of applicants. From
2003 to 2007, the SASAC hired 91 executives out of 5,985 applicants, 11 of whom
had overseas experience.

Other companies should take similar measures. Not
only should they introduce management talents, but also hire more experienced
financial staff. When the Wall Street is laying off employees, it is high time
that Chinese companies bring these talents to China to boost domestic growth.

China needs reforms, in many fields. As a developing
country facing varied challenges, China should be prudent in blending long-term
economic reforms and short-term stimulus policies.

The two aspects should be
carried out in parallel. And one thing should always be born in mind: No policy
solves everything.