The Chinese economy has maintained a bullish run for decades. But in recent years inflation has become more threatening. Worries therefore grow that the robust economy may slump due to the overwhelming macro-economic controls. How should China rein in inflation and at the same time hedge against economic freefall? What differentiates the country's macro-economic controls in recent years from those in the past? Liu Shucheng and Zhang Xiaojing, researchers with the Institute of Economics under the Chinese Academy of Social Sciences, gave their opinions in the following excerpts:

China took the world by surprise with its remarkable economic achievements after it launched reform and opening up 30 years ago, especially in the last five years. But such exploding growth cannot happen without a maturing market economy and corresponding macro-economic controls. The past five years have seen the control measures evolve in tune with the country's economic changes.

In 2008, the economy is confronted with daunting challenges, including the devastating Wenchuan earthquake. Nevertheless, it is widely believed that the country's economic base will stay intact. The government's stringent grip on both inflation and a sizzling economy will not be relaxed. We still can't rush to the conclusion that the country's economic growth has come to a threshold that signals a downward trend.

A new economic era

China's macro-economic controls have kept pace with an array of radical changes incurred in the economy since 2003.

The first is a more energetic economic system. On the one hand, the socialist market economy has been erected. The public economy has developed diversified forms and the non-public economy flourished. Multiple ownerships can compete with each other on an equal footing, which has posed a stimulus for their development.

On the other hand, the markets of various production elements, such as labor force, capital, technologies and land, also experienced exuberance. The market plays a bigger role in resource allocation. The new system has elevated market efficiencies and helped with the country's material supplies. The acute shortages of coal, electricity, oil, transportation facilities and important raw materials that choked the economy before have all significantly moderated.

The second is an acceleration of industrialization and urbanization. Since the beginning of the new century, China's per-capita income has reported substantial rises. The country's per-capita gross domestic product breached $1,000 in 2001 and toppled $2,000 in 2006.

Besides this, the higher income, upgraded consumption and industrial structures and the above-mentioned stronger supply capabilities all contributed to a surging potential growth rate. Potential growth rate refers to a growth rate that can be achieved on condition of full and adequate use of all resources and no inflation.

The third change in the Chinese economy is more economic openness. China's foreign-related economy has picked up momentum in the past five years, extending further and probing deeper into new sectors.

Since entering the World Trade Organization (WTO), the country has safely navigated through the transition period. Its foreign trade has boomed, the influx of foreign investment got in full swing, and its forex reserves are also swelling. Meanwhile, China is geared up toward going global and exploring the international market, reflected in its euphoric overseas investments.

On the financial frontier, the country's capital accounts are opened to the world. The reform of the renminbi exchange rate mechanism has been forging ahead since 2005, endowing the Chinese currency with greater resilience. All these have allowed greater breathing room for further development, but at the same time added difficulties to macro-economic controls.