Press Conference on Economic Situation, Social Development

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Last updated at: (Beijing Time) Monday, November 11, 2002

Press Conference on Economic Situation, Social Development

Officials from the State Development Planning Commission (SDPC) and the State Economic and Trade Commission (SETC) held a press conference Sunday afternoon on nation's economic situation and social development.

Listen to the audio here (English Translation available)

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Economy maintains good momentum in 2002

China's national economy has maintained a good momentum of fairly rapid growth since the beginning of this year, Zeng Peiyan, minister in charge of the State Development Planning Commission, said here Sunday.

Zeng said this at a press conference held on the sidelines of the ongoing 16th National Congress of the Communist Party of China(CPC), which opened here Friday and will last for a week.

"This year China's GDP (gross domestic product) is expected to exceed 10 trillion RMB yuan (about 1.2048 trillion US dollars), an increase of some 8 percent compared with last year," said Zeng in his opening remarks.

The first three quarters have already seen the national economy grow by 7.9 percent, 0.3 percentage points higher than the same period in 2001, he said.

The total imports and exports are likely to amount to US$600 billion, and contractual foreign direct investment will hopefully record a new high of more than US$50 billion this year, Zeng added.

Asked about the consistency of China's economic policies in the years to come, Zeng said the main policies expressed in General Secretary Jiang Zemin's report to the Party congress on Friday are actually consistent with policies conducted since the 15th Party congress in 1997.

In addition to maintaining consistency, China will readjust and improve its economic policies to keep pace with the times and in accordance with new situations, he said.

Zeng also described the past 13 years since 1989 as "the best development period in the Chinese history" in which the broad masses of people have gained the most benefits and the society hasenjoyed the highest level of stability. "It is really a prosperous golden age," he said.

Zeng answered questions on China's economic development and social progress from foreign and Chinese journalists attending the press conference.

State sector reform achieves major advancement

China has embarked on a "road of success with Chinese characteristics" in effectively combining public ownership and market economy and promoting the overall development of the state sector, said Li Rongrong, minister in charge of the State Economic and Trade Commission.

"From the beginning of this year, (China's) state-owned enterprises have continued to maintain a sound development momentum and are expected to make more profits than in the last year," said Li in his opening remarks at the press conference held on the sidelines of the ongoing 16th National Congress of the Communist Party of China (CPC).

From 1989 to 2001, the annual average tax revenues from each state-owned enterprise had surged to 7 million RMB yuan (about 942,000 US dollars) from 1 million yuan (121,000 US dollars), the annual per capita labor productivity in state-owned enterprises to54,772 yuan (6,599 dollars) from 9,115 yuan (1098 dollars), and the net value of fixed assets of all state-owned enterprises to 3.9 trillion yuan (476 billion dollars) from 703 billion yuan (84 billion dollars), said Li.

In the past 13 years, while the total number of state-owned industrial enterprises had dwindled sharply from 102,300 to 46,800,the overall profits they made had increased to 238 billion yuan (28 billion dollars) from a mere 74 billion yuan (8.9 billion dollars), he added.

Describing the reform of state-owned enterprises as the "most difficult and most challenging central link" of the entire economic restructuring, Li said that this reform would be further deepened in China's pursuit of a new industrialization model with high technological content, good economic returns, low resources consumption, little pollution and efficient use of human resources.

"While continuing to enhance the competitiveness of the state sector, we will also support and guide the non-public sector for abetter development in order to create a fine situation in which public and non-public sectors help each other for mutual development," he added.

Li answered questions on China's industrial restructuring, state-owned enterprises reform and market order regulation from foreign and Chinese journalists attending the press conference.

China to provide level playing ground for private businesses

China's booming private sector will get level playing ground in market competition with the state sector as well as foreign investors, Zeng pledged.

All economic sectors open to foreign capital will also be open to domestic private businesses, said Zeng Peiyan at the press conference held by the press center of the 16th National Congress of the Communist Party of China (CPC).

In response to a question from a US correspondent, Zeng said that it is a policy of the Chinese government to treat non-state-owned and state-owned enterprises equally, and let them engage in fair play.

"Private enterprises will be treated the same as state-owned and foreign-invested enterprises in market access, use of land, taxation, credit and foreign trade," said Zeng.

Zeng said: "If private enterprises show financial strength and have a good reputation, we will be in a position to approve them to issue bonds."

The downsizing of State-owned enterprises in the deepening reform and restructuring has laid off up to 24 million workers in recent year. Among them, 17 million have found new jobs, but more than 6 million still frequent re-employment centres, he said.

The pressure on employment is also mounting because each year, some 10 million new workers - such as college graduates - enter the workforce, and a surging number of farmers migrate to urban areas seeking jobs, Zeng said.

As a result, the unemployment rate is projected to hit 4 percent by the end of this year, Zeng added. This is slightly higher than the same figure at the end of 2001.

Despite the rising unemployment rate, China is still stable, partly because the country's social security system has played its due role, he said.

Governments at all levels have given top priority to addressing unemployment. To solve problems cropping up on our way forward through development, China will speed up economic development to ease its employment pressures, Zeng said.

The country's economic restructuring will gain speed, and the development of the service industry will increase, he said. Emerging private enterprises can absorb some of the redundant labour, he said.

In addition, the government will provide services in training laid-off workers and create more labour markets, he said.

According to official statistics, the total number of private enterprises in China rocketed to 2.03 million in 2001 from a mere 90,000 in 1998. Economic observers expect the private sector in China to continue to grow rapidly in the coming years.

China's SOEs to be less but better

In response to a question on a provisional regulation his commission released on Saturday regarding the use of foreign capital for restructuring State-owned enterprises (SOEs), Li said the statute indicated that China is deepening SOE reform and opening up wider to the outside world.

Details of the regulation are not currently available.

Li said the regulation is a continuation of a circular the commission issued last week along with the China Securities Regulatory Commission, which gives foreign investors wider access to China's stock market by allowing them to use the public tender process to buy State-owned or institutional shares in home-grown listed companies.

The number of China's state-owned enterprises (SOE) will continue to decrease, but their quality and performance will be further improved in the years to come, said Li Rongrong..

"We don't have a specific quota for the proportion of the state sector in the national economy, but it is certain that the number of SOEs will further drop," Li said when responding to a question on recent green light for foreign capital to participate in the transformation of China's SOEs.

"The key for SOE development lies in their performance and quality rather than the mere number," he said, adding that he is optimistic about the prospect of SOEs' performance.

The Chinese government recently promulgated several new regulations which allow state companies to sell state-owned shares to foreign investors and standardize takeovers related to listed companies.

Such measures will help readjust the structure of the state sector and expand the fundamental role of market demand in resource allocation, he said.

Already the number of SOEs in China has plunged from 102,300 in 1989 to 46,800 last year, Li said. But the overall profits they made jumped to 238.9 billion yuan (US$28.7 billion) in 2001 from a meagre 74 billion yuan (US$8.9 billion in current exchange rate) in 1989, he said.

Li said SOE reform is the "most difficult and most challenging central link" of the entire economic restructuring of China.

Reform will only deepen further in China's pursuit of a new industrialization model that includes using high-tech methods, and having good economic returns, low resource consumption, little pollution and efficient use of human resources, he said.

While continuing to sharpen the competitive edge of the State sector, China will also support and guide the private sector for better development to create a mutually beneficial situation where the public and private sectors help each other, he said.

Li says his commission does not give special treatment to SOEs. China's commercial banks have no responsibility and are not obliged to render loans to SOEs.

"We treat SOEs and private firms equally," he said. "All our policies are made public on our website." Private and State firms are equal competitors and enjoy the same market access. All economic sectors open to foreign capital will also be open to domestic private businesses, he said.

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