The expected double-digit growth for a fifth consecutive year did not necessarily mean the Chinese economy was free from disturbance. A glance through the media catchwords of 2007 may offer a rough idea about the critical issues China has been facing over the past year.
"Sound and fast"
To guide national economic development, the Central Economic Work Conference called for a "fast and sound" development in 2005.A year later, the key conference changed the wording into a "sound and fast" development. This year, the conference concluded with "insisting on putting the word 'sound' above everything else".
The emphasis on "sound" demonstrated the central government's determination in accelerating the shift of economic growth mode and realizing a comprehensive, balanced and sustainable development of the national economy.
As the Chinese saying goes, "The concept itself is not at all difficult to understand; it's just hard to carry it out". By giving the word "sound" top priority, the government would have to spend a long time before achieving the balances between growth speed and quality, consumption and investment/export, population increase and resources/environment, and above all, the balance between reform and stability.
Huge rises in food prices lifted the nation's consumer price index to an 11-year high of 6.9 percent in November. Prices of food, which has a 33 percent weighting on the consumer price index(CPI), soared 18.2 percent last month.
The high inflation, well above the three percent target for all of 2007, had become a major concern of the government for fear it would make the lives of poor people much more difficult.
The price increases were deemed as "structural and temporary in nature" because the rises were not caused by an imbalance between general social demand and supply. But it was widely believed that China was entering a period when inflation would keep rising.
The Central Economic Work Conference, which mapped a plan for next year's economic development, took the effort "to prevent structural price increases from becoming evident inflation" as a primary task of the macroeconomic control.
People might worry about whether or not they would have to pay more money to fill up their shopping basket at a time when the end of the year is approaching.
In recent years, "excess liquidity" has been among the most popular economic terms. It usually referred to an economic situation in which there was an ample supply of capital and banks had a strong impulse to lend.
Affected by imbalance in the world economy, China has been bothered by mounting trade surplus that resulted in huge foreign exchange reserves and the banking system's credit initiative.
China's Foreign Trade Situation Report predicted that the nation's annual trade surplus would reach 250 billion U.S. dollars this year. Tightening monetary policies such as credit squeezes might temporarily ease the problem, but the key lies in obtaining a balance between foreign earnings and payments.
This requires a reasonable growth of the Chinese currency, the yuan. Meanwhile, it also calls for the expansion of domestic demand and maturity of the financial system.
China's currency, the yuan, hit a new high against the U.S. dollar on Dec. 13, breaking the 7.36 mark. The central parity rate stood at 7.3568 yuan against one dollar.
The yuan has appreciated about 11 percent since China de-pegged it from the U.S. dollar in July 2005.
Some critics said that the yuan was undervalued, something which gave China exporters an unfair price advantage. It was also a main reason for the massive trade imbalance between China and its major trading partners.
At the fourth China-EU Business Summit held recently, Premier Wen Jiabao said China would continue to follow an independent, controllable, and gradual approach in improving the exchange rate mechanism.
He said China would give better play to the basic role of market supply and demand while reforming its exchange rate system to strengthen the yuan's flexibility and gradually make it convertible under the capital account.
The People's Bank of China, the central bank, raised the benchmark deposit and lending rates on March 18, May 19, July 21, August 21 and September 15 this year. On Thursday, the central bank raised interest rates for the sixth time this year to cool the economy after inflation accelerated at its quickest pace since1996.
Such frequent rate hikes have been rarely seen in history. Meanwhile, the central bank ordered lenders to set aside more money as reserves on 10 occasions. The latest one percent increase of the reserve ratio was the biggest in four years.
The monetary policies, in the form of "combination punches" as described by analysts, aimed at strengthening the currency and guiding investment growth.
As the Central Economic Work Conference said next year the government would "strictly control the supply of money and credit and keep a close watch over supply rhythm". It was even more worthwhile to expect the "combination punches" in 2008.
The Shanghai Stock Exchange Market and the Shenzhen Stock Exchange Market now have 130 million general accounts, with more than 5,000 institutional investors.
The sufficient liquidity at the macroeconomic level and the great enthusiasm on the part of medium and small investors enabled China's stock markets to enjoy prosperous business in 2007-- a scene that has not been seen for a long time.
On May 29, the government increased the stamp tax on securities transactions by a great margin. This resulted in a big drop in the stock market. But the market soon restored an upward trend until the current seesawing adjustment.
A bullish market calls for discipline and rationality. China Securities Regulatory Commission Chairman Shang Fulin has said, generally speaking, China's capital market was still in the primary stage of continuous and solid development.
He pointed out that the key task at present, and for some time to come, was to "accurately grasp the development rule and features of the capital market, strive to develop the capital market and raise the proportion of direct financing".
This statistical term was used in the report delivered at the 17th Party Congress. It generally refers to earnings from bank deposits, negotiable securities, and other personal properties, as well as from houses, cars, collections and other real estate investments owned by families.
The original statement in the report read "conditions will be created to enable more citizens to have property income". Yi Xianrong, a researcher with the Chinese Academy of Social Sciences, said the most important way to make sure that the masses enjoyed an increase in property income was to increase the proportion of work remuneration in primary distribution.
Energy and emission
The concepts of energy conservation and emission reduction have become common understandings of the central and local governments. They have also won support from the Chinese people.
In 2007, a turning point appeared for the first time in the aspect of energy conservation and emission reduction. In the first three quarters, energy consumption per unit of GDP dropped three per cent and the discharges of both sulfur dioxide and chemical oxygen demand dropped for the first time.
It seemed the nation would achieve the goal in the Outline of the 11th Five-Year Plan -- "from 2006 to 2010, we will achieve the goal of reducing the energy consumption per unit of GDP by around 20 per cent and the total emission of major pollutants by 10 per cent".
Next year will be critical for accomplishing this mandatory target. It would take concerted efforts from the entire society to accomplish this target.
This year, China's legislative body took a significant step forward to strengthening its economic legislation.
In the Law on Corporate Income Tax, it stipulates that "the income tax for both Chinese-funded enterprises and foreign-funded enterprises is 25 per cent."
In the Property Rights Law, it stipulates that "the property rights of the state, collectives, and individuals, as well as the property rights of other right holders, are protected by law and no unit or individual may infringe on the rights".
In the Anti-Monopoly Law, it stipulates that foreign capital merger and acquisition that involved national security should go through two different kinds of examination.
The legislature has also adopted a series of new laws, including the Labour Contract Law and the Employment Promotion Law which aimed at protecting the basic rights of the people, the Law on Urban and Rural Planning and Draft Amendment to the Law on Energy Conservation which served to point out a direction for the macro-economy.
The economic lawmaking has been deepened from the level of the framework legislation. It has paid more attention to the establishment of the system and standardization of rights and responsibilities, as well as protection of rights and benefits.
Made in China
"Made in China" -- a term familiar to people of numerous countries around the world -- suffered from an unprecedented "confidence crisis" this year.
The blasting fuse was the recall of China-made toys by Mattel Inc. It was followed by the fact that Chinese exporters encountered quality problems with their toys, toothpastes and foods.
The reasons for the recalls were not just quality defects because behind them were standard disputes, technical barriers, trade protection and the playing-up of media coverage.
However, China was determined to restore the confidence in "China-made" products with a four-month nationwide special campaign for rectification of product quality and food safety.