CHINA MUST CUT DEMAND, CONTINUE REFORMS: ZHAO
China must cut excess demand and capital
investment in the face of budget and foreign exchange deficits
but will press ahead with wide-ranging economic reforms in
1987, Premier Zhao Ziyang told parliament.
    Zhao told the annual meeting of the National People's
Congress that while China cooled its overheated economy, cut
its trade deficit and raised national living standards in 1986,
serious imbalances remain.
    Zhao said total social demand exceeds total supply, and
demand for consumer goods, especially from state firms, is too
high. "(They) squander public funds to a serious extent ... (and
issue) excessive wage and bonus increases," he said.
    Failure to cut this excess will "result in reduced
accumulation of funds...And serve to corrupt social morality,"
Zhao said. He said there was a contradiction between low per
capita incomes and excessively high consumer demand.
    China needs to accumulate enormous funds for construction
in its initial stage of socialist modernisation and consumption
must match the available resources, he said.
    Zhao said there was a deficit in state finances in 1986
because of the sharp fall in world oil prices, the rising cost
of foreign exchange earnings through exports, reduced income
from customs duties and unreasonably heavy spending.
    Investment in energy, transport, telecommunications and raw
and semi-finished materials industries is inadequate and
investment in non-productive projects is too large, he said.
 Reuter
