News Analysis: Chinese Economy in a Growth Spurt?

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Last updated at: (Beijing Time) Wednesday, April 16, 2003

News Analysis: Chinese Economy in a Growth Spurt?

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Economists estimate that China's gross domestic product (GDP) in the first quarter of this year grew between 9 and 10 percent, the highest rate in the last six years, leading expert Hu Angang to say that China is in another economic growth spurt.

Although Chinese economists still differ on this issue, the surge in industrial production, investment and exports, as well as the improvement of consumption and enterprise performance indices, show that the Chinese economy is gaining momentum for further growth and that deflationary pressure has been alleviated.

Tang Min, with the Asian Development Bank, says investment and consumption are the essential criteria used to determine whether or not the Chinese economy is in another growth spurt.

In the first two months of this year, fixed asset investment grew 32.8 percent year-on-year, and personal investment grew faster than state investment.

In the first quarter of this year, foreign direct investment grew 56.7 percent, to over 13 billion US dollars, and during the same period, 30 percent of industrial output growth was contributed by foreign-funded enterprises.

In China, consumer demand for automobiles and real estate has been expanding since the beginning of this year, which has provided a boost for relevant industries.

Some experts, however, still think that China's economic growth may fall in the latter part of this year. Experts point out that unemployment and the income gap between rich and poor will continue to block economic development in the long-term.

Deputy Director Qiu Xiaohua of the National Statistics Bureau said China's economy may grow at an annual rate of 8 percent this year, but the Iraq war and the disease of severe acute respiratory syndrome may affect China's economy. Some people have begun to worry about "bubbles" in real estate development, and uncertainties are still present in China's economy.

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