Economy Grows 7.3% in 2001, Uphill Battle Still Ahead

Home>>Business

Last updated at: (Beijing Time) Monday, December 31, 2001

Economy Grows 7.3% in 2001, Uphill Battle Still Ahead

NBS announced Sunday evening in Beijing that China's GDP grew by 7.3 percent to reach 9.85 trillion yuan in 2001.
However, China's economy also faces uphill battle. As the world economy heads into its deepest downturn in two decades, the Chinese government is preparing to overcome bigger difficulties and sustain steady economic growth next year.

Healthy & Sustainable Economic Growth in 2001

Zhu Zhixin, director of the NBS, told a press conference that the domestic economy maintained a healthy and sustainable growth in 2001.

Agriculture

Preliminary figures showed that despite a reduction in grain acreage and severe natural disasters in some regions, the country' s grain output is expected to surpass 450 million tons this year and the yields of cotton and sugar will increase more than 10 percent. The output of meat and aquatic products also saw steady growth.

In the same time, the acreage of quality wheat increased over 1. 3 million hectares, while quality rice accounted for more than 50 percent of the total grain acreage.

Industry

During January-November, industrial production surged 10 percent year-on-year, and the profits of industrial enterprises reached 406.9 billion yuan, up 7.4 percent over the same period of last year.

The reform of state-owned enterprises (SOEs) has achieved progress this year, with 13 of the 14 key industries getting out of the red to make profits, Zhu said.

China also further reduced redundant production capacity in such primary industries as coal mining, metallurgy, construction materials and power generation. In the same time, the hi-tech industry saw a fast growth this year.

During January-November, the output of electronic and telecommunication products, such as microwave communication equipment, optical telecommunication equipment, mobile telephones and personal computers, registered growth rates ranging from 20 percent to 130 percent respectively.

Figures showed that retail sales totaled 3.356 trillion yuan in the first 11 months of this year, up 10.1 percent. The growth rate was 0.3 percentage points faster than in the same period of last year.

Consumer Price

Meanwhile, the consumer price index (CPI) rose 0.8 percent nationwide over the same period of last year. The CPI in urban areas increased 0.8 percent, while the CPI in rural areas grew 0.9 percent.

The prices of food, products and services for entertainment, education and culture, and housing jumped this year. The prices of primary products saw a slow rise, but the factory price of industrial products was 1.1 percent lower than last year. The prices for raw materials, fuel and energy went up 0.1 percent.

Finance

According to the NBS, the average disposable income per capita of urban residents grew 8.2 percent in real terms in 2001, 1.8 percentage points higher than last year, while the average net income per capita for rural residents increased 4.0 percent in real terms, 1.9 percentage points higher than last year.

NBS figures indicated that bank savings of Chinese residents registered a remarkable increase. By the end of November, savings deposit totaled 7.23 trillion yuan, 801.9 billion yuan more than at the beginning of this year.

China's Economy Faces Uphill Battle

Government's Efforts

As the world economy heads into its deepest downturn in two decades, the Chinese government is preparing to overcome bigger difficulties and sustain steady economic growth next year.

Zhu Zhixin said China has worked hard to overcome the impact of the fast- changing and complicated international economic and political environment in a bid to maintain a healthy, sustainable economic growth this year.

Export Markets & Foreign Trade

As China's major export markets -- the U.S., Europe and Japan -- saw simultaneous downturns this year, the growth rate of exports shrank to about five percent from 27.8 percent last year, and the trade surplus decreased by more than US$3 billion.

Minister of Foreign Trade and Economic Cooperation Shi Guangsheng said China will face an even worse international economic environment next year. He said China will do its best to maintain a net growth of exports in 2002.

Domestic Investment & Consumption

To offset the impact of decreasing overseas demand, the Chinese government adopted a stimulative policy of expanding investment and consumption.

It issued 150 billion yuan-worth of treasury bonds for construction in 2001, pushing up the country's investment in fixed assets by 16.3 percent during the January- November period. Large-scale construction projects helped spur the production of steel, cement, glass, energy and transportation. As a result, China's industrial production increased 10 percent during the period.

Fiscal Policy

China will prolong its pro-active fiscal policy into the fifth straight year in 2002. Zeng Peiyan, minister in charge of the State Development Planning Commission (SDPC), said the construction of government-funded projects will start earlier than usual next year, so as to prop up the investment momentum that seemed to tail off in the fourth quarter of this year.

A total of 510 billion yuan-worth of treasury bonds has been issued to fund fixed-assets investment over the past four years. Minister of Finance Xiang Huaicheng said the budget deficit will rise to a comparatively high level next year, as the government will continue to contract public debts.

However, he said the debt burden is still within the international safety limit, and there will be no financial risks if the borrowed money can produce due returns.

The treasury bonds have mainly been used to fund agricultural production, infrastructural construction, environmental protection and technical upgrading of state-owned enterprises.

This has helped improve social productivity and increase government revenue. The fiscal revenue of the central government increased 23.1 percent year-on-year over the first 11 months of this year, tripling the growth rate of the economy.

Dai Xianglong, president of the People's Bank of China, said the exchange rate of the Chinese currency, the RMB, remains stable, and that the central bank has no plan to lower interest rates. Through a set of policies to stimulate consumption and reform the financial sector, the Chinese government is steering the economy out of the shadow of deflation and maintained a low inflation rate. The State Economic and Trade Commission (SETC) estimates that the inflation rate was below 0.7 percent in 2001.

Managing Director of the International Monetary Fund (IMF) Horst Koehler said that at times of difficulty China made the right choice of continuing economic reform. Through three years of intensive reform of its state-owned enterprises, the country managed to promote profits of industrial enterprises by 7.4 percent in the first 11 months of this year. A number of new economic growth points are on the rise. During the January- November period, growth rates of the output of electronic and telecommunication products varied between 20 percent and 130 percent.

Efforts to Meet WTO Challenges

In face of intensified international competition following its accession to the World Trade Organization (WTO), the Chinese government decided not to relax its efforts for economic restructuring.

According to an official forecast, the registered unemployment rate in cities will rise to 4.5 percent next year, from around four percent this year. Minister of Labor and Social Security Zhang Zuoji said that the government will liberalize the labor market and encourage the development of new industries, so as to create more job opportunities next year.

Minister Zeng Peiyan said China will gradually open up the service sector to foreign investors, and begin to overhaul its administrative system of investment and financing next year.

The government's comprehensive economic policies are expected to protect the Chinese economy from excessive fluctuations. The IMF has forecast that China's economy will grow by 6.8 percent in 2002, far above the world average of 2.4 percent.

Two features in this year's economic landscape

The gradual slowdown of the growth from the beginning of the year

The decreasing profits of State-owned enterprises (SOEs)

The growth of the GDP in the fourth quarter is expected to be around 6.5 per cent, dropping by 1.6 per cent compared with the first quarter.

Meanwhile, although SOEs' production this year will increase 9.5 to 9.8 per cent, their profits are estimated to be lower than the previous year.

Information sector believed a pillar for economic development

The information industry remained the biggest national economic sector for the country with an output value of 1.95 trillion yuan (US$236 billion).

The electronics and information product manufacturing reached 1.35 trillion yuan (US$163 billion), an increase of about 25 per cent, while the production of telecommunications was 600 billion yuan (US$73 billion), growing approximately 27 per cent.

China's 10th Five-Year Plan Sees Good Beginning in 2001

China Economy Grows 7.4 Percent in 2001: Official

China's Economy to Grow 7.4 Percent, GDP to Top US$1.15 Trillion This Year