The Chinese population has benefited a great deal from the implementation of the reform since 1978. From 1978 to 1995, the per capita household income of the urban and rural population increased by 187.2 percent and 275.4 percent, respectively, while social protection was significantly strengthened as the ratio of social security and welfare benefits to the total wage payment increased from 13.7 percent to 29.2 percent. Such tangible benefits have contributed to public confidence in the Government's macroeconomic management and growth prospects. The strong confidence was reflected by the fact that the two downward interest rate adjustments last year only resulted in a temporary and limited decline in household savings deposits growth. Public confidence is a fundamental condition for maintaining social stability, which, in turn, is a precondition for reform.
Some people ask whether such a steady and strong growth momentum is sustainable.
My answer is positive. Nevertheless, we are also well aware of the constraints to sustainable growth. First, the reform of the state-owned sector will take time as many SOEs have yet to struggle to rise from inefficiency. Second, the Government is faced with high unemployment pressures. Its annual capacity of creating 8 million jobs still falls short of the need to accommodate about 12 million job seekers.