Drive to reduce bureaucracy welcomed

The new government push to cut bureaucracy to energize the economy should be applauded, although there are doubts about its effectiveness, economists told the Global Times Tuesday.

During a nationwide State Council teleconference Monday, Premier Li Keqiang urged officials to delegate authority on market control and approval procedures, and focus on creating a favorable environment for development, providing quality public services and maintaining social equity and justice, Xinhua reported.

The government has canceled 133 items of administrative approval procedures since it announced a plan to speed up economic reform on March 28. "However, the work must be further carried forward with greater courage and wisdom," Li remarked.

Li said the transformation is "important and urgently needed" to stabilize growth, control inflation and prevent risks, according to Xinhua.

The consumer price index for April rose 2.4 percent year-on-year, higher than expectations, and Nomura China Chief Economist Zhang Zhiwei predicted Thursday that it would rise to 2.9 percent in June.

Meanwhile, the People's Bank of China, the country's central bank, may be under pressure to lower interest rates, following the steps of the other major central banks in the world, economists at Australia & New Zealand Banking Group (ANZ) said in a research note e-mailed to the Global Times Tuesday.

"The streamlining of the government is aimed at activating the market and leaving room for the market to play a leading role in the economy," Wang Yiming, vice president of the Academy of Macroeconomic Research under the National Development and Reform Commission, told the Global Times Tuesday.

"The State Council's resolution is stronger than in the past," Wang noted.

"It's better than nothing, but implementation is key. The government has tried many times in the past to reduce bureaucracy, but without much effect," Zhou Hao, an economist at ANZ, told the Global Times Tuesday. "For example, the central government asked for birth certificate approvals to be simplified, but at the neighborhood committee level, things turned out differently."

Simply making more credit available can no longer buttress economic growth, the ANZ economists suggested.

China needs overall structural reform, including structural tax cuts, deregulation, dismantling of monopolies, interest rate liberalization and deepening of the capital market, they said.

The Shanghai Stock Exchange Composite Index closed down 24.91 points at 2,217.01 points Tuesday, 9 percent below the high point for the year recorded in February.

"Investor confidence is still weak, because they don't see any fundamental change (in government bureaucracy)," Zhou noted.

"The (government) entities involved may have various concerns about letting go of their own power, but we must believe that the market is better at allocating resources," Wang said.