Arduous task of stabilizing growth, adjusting structure

Premier Wen called for close attention to new conditions and problems and the implementation of flexible and prudent macro-policies with timely and appropriate anticipatory adjustments and fine-tuning to ensure a sound and rapid economic development.

Though the pace of the first-quarter slowdown is within control, but given the severe internal and external economic environment, the foremost task right now is to prevent the economy from further slipping.

China should put priority on stabilizing economic growth and closely watch the situation change, at the same time strengthen the coordination between industrial policies, fiscal and credit policies, so as to resolve various risks and guard against fast decline of growth rate.

Regarding monetary policy, due to being restricted by uncertainties of imported inflation and current banking system, the credit supply is still hard to meet the demands of small and medium-sized enterprises. China should on one hand fine tune its monetary policy to boost the financing support for those enterprises and on the other hand push forward the reform in banking sector and promote development of small banks. These are difficult tasks China should deal with.

Only last week, China approved financial reforms for Wenzhou -- known as the country's cradle of private enterprise -- to encourage private investment in local banks.

Under the banking reform being tested in Wenzhou, private investors will be encouraged to buy into local banks and to set up financial institutions such as loan companies and rural community banks, the State Council has said.

China hopes it will enable hungry small businesses -- vital to employment -- to access finance more easily and cheaply.

In terms of fiscal policy, greater efforts should be made in structural tax reduction. Currently, large-scale fiscal spending is neither conducive to stabilizing commodity prices nor to adjusting economic structure. Whereas, structural tax reduction will encourage not only personal consumption but also enterprises�� investment, especially beneficial to small and medium firms, thus getting the best of the two worlds �C stabilizing growth and adjusting structure. However, to press ahead the structural tax reduction, it is necessary to reform the current financial and taxation systems.

The government has firm support for small and medium-sized enterprises and it is mulling over further structural tax reductions to back up their development, said Premier Wen when visiting local private enterprises in southern China.

The government should properly handle the relationship among maintaining a sound and rapid economic development, adjusting economic structures and managing inflationary expectations, said Wen.

"The fundamentals of the Chinese economy remain good and the momentum of economic growth has not changed. We will be able to maintain steady and relatively fast development in the long term," Vice Premier Li Keqiang said in a speech at the opening ceremony of the Boao ForumC.

"Expanding domestic consumption is our top priority in adjusting the economic structure," said Li.