No. 325, July 23(1)

Treating the Economy: Rates up Third Time 

On July 21, the central bank raised the lending and deposit benchmark rates by 0.27 percentage points. That same day, the State Council decided to lower the interest tax from 20 percent to 5 percent starting August 15. This comes as experts are split among two camps: one saying that the economy is overheating due to investment and the trade surplus, while the other is emphasizing steady growth due to an improvement of the economic foundation, adding that China's growth should be viewed in the context of a developing country.  

Original article: [Chinese]

Editorial: The First Step to Fixing the Economy is Solving the People's Basic Needs 

Economic regulators have not only failed in smoothing out China's runaway growth, they have also failed to deal with long-term threats to China's economic stability. If the government invests more in public service and welfare, it will establish the foundation Chinese need to save less and consume more. Only if China begins investing in these publicly enjoyable necessities—education, healthcare, social security, etc.—will Chinese begin to part with their disposable income and lead China into a new age of domestic-demand driven growth. 

Original article: [Chinese]

Without Punishment, Audit is “Paper Tiger” 

On July 17 the National Audit Office released a review of the central government's budget implementation, revealing discrepencies with government revenues. Our correspondent contacted several of the 56 government agencies mentioned in the report with questions regarding cases of embezzelment and malfeasance but was consistently refused information and told that blame lay elsewhere.

Original article: [Chinese]