First-half-year GDP Growth Estimated at Impressive 7.5%

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Last updated at: (Beijing Time) Tuesday, July 09, 2002

First-half-year GDP Growth Estimated at Impressive 7.5%

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Prompted by better-than-expected foreign trade development and larger government expenditure on infrastructure, China's gross domestic product (GDP) growth will maintain its strong upward momentum with a rate of 7.5 per cent during the first six months of the year, a senior expert with the National Bureau of Statistics (NBS) predicted.

"China is on the right track to realize its set economic goals," said Yan Xianpu, a senior economist with the NBS. "This year's GDP growth rate could even be higher than that of last year."

China's GDP growth was 7.3 per cent last year. It might be 7 to 8 per cent this year, he said.

China's foreign trade has registered a positive performance in the first half of the year, thus suggesting overall economic growth will exceed 7 per cent, Yan added.

"The sizzling global economic recovery has come earlier than expected, which, in turn, has created a sound external environment for China's economic development," Yan stressed.

Total import and export volume is expected to rise by 12 per cent, while exports may increase 13 per cent in this period, he said.

Foreign direct investment (FDI), according to NBS statistics, grew by 12.4 per cent to hit US$16.9 billion in the first five months of the year.

Based on the performance of China's foreign trade and FDI in the first half of the year, the country's external commerce will keep a robust growth in the following months, he said.

China plans to issue 150 billion yuan (US$18.1 billion) worth of treasury bonds this year, and this huge State expenditure will be used in a number of large infrastructure projects to boost the domestic market.

Investment in fixed assets witnessed an accelerated swell in the first half of the year, which is likely to increase by 25 per cent compared with the same period last year, he said.

Industry also expanded rapidly. In the first six months of the year, the added value created by large State-owned enterprises and non-State firms is expected to rise 11 per cent compared with the same period last year.

Domestic consumption, which has become a growth engine for China's economic development in recent years, was also said to be a major driving force for the GDP growth in the first half of the year.

While the domestic market of consumer goods saw slightly slower growth, the total retail sales of consumer goods rose by 8.6 per cent in the first six months.

Yan added that China's large population of 1.3 billion has impeded the swift and thorough implementation of the country's economic reforms, but it has guaranteed a huge domestic market with vast potential for development.

Despite certain problems - such as a high unemployment rate, growing income gap, deflation and a slow rural income growth - that will continue to pose challenges for the country's economic development, many local economists believe the annual GDP growth will surpass 7 per cent as planned.

The past several years have indicated that at least a 10 per cent industry growth rate will very likely guarantee the GDP to hit 7 per cent, Yan said.

Yan also noted that policy stability will ensure China's economic growth this year. The Communist Party of China will summon its 16th national congress this autumn. Most believe that economic development will be further addressed at the meeting, and this positive expectation will help stimulate the country's business activities.

"The economy's steady growth, however, should not blind us to the negative signals," Yan said.

The sluggish growth of rural residents' income has negatively influenced the growth of domestic demand and will inevitably intensify deflationary pressures on the national economy.

Continuously decreasing average prices are expected to be another problem.

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