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 | Tuesday, April 18, 2000, updated at 20:01(GMT+8) | ||||||||||||
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Latest Statistics Bode Well for Chinese EconomyChina's first quarter statistics released on Tuesday bode well for a brighter vista of the country's vibrant economy, though some economists cautioned sustained recovery from deflation needs further fine-tuning.Healthy retail sales and stronger fixed asset investment growth combined with surging foreign trade and easing deflation led China's economic planners to predict a recovery. First quarter economic growth "showed signs of a better future and the growth of gross domestic product this year is expected to surpass that of last year," Liu Chengxiang, spokesman for the National Bureau of Statistics announced in Beijing. China's first quarter GDP growth rose to 8.1 percent year-on-year, up from 7.1 percent for the full-year 1999. But surging export growth, which has fuelled the incipient recovery in China's domestic demand, could be knocked sideways if the recent nosedive in global stockmarkets turns into an extended downturn, some economists warned. They also said a sustained pick-up in foreign investment is required to ensure sustained recovery. The tech-heavy US Nasdaq index and the Dow Jones Industrial Average plunged last week, sending Asian markets into a tailspin on Monday, although the markets regained some ground on Tuesday. ``If the correction in stock markets around the world continues that may affect exports..the trade surplus a big variable," Ben Chiu, research director at HongKong Shanghai Banking Corp noted. Both Dow Jones and Nasdaq regained some lost grounds on Monday, signalling the latest bout of stock tumble does not mean onslaughter of a worldwide economic slowdown. China's two stock markets in Shanghai and Shenzhen also reported modest rebounding on Tuesday. China's trade surplus widened to US$5.2 billion in the first quarter of this year from US$4.3 billion at the end of 1999. Export growth surged 39.1 percent year-on-year to US$51.7 billion and imports grew US$46.5 billion, according to official figures. Money from China's expanding trade surplus has fed into other sectors of the economy, boosting retail sales and industrial output, whittling away the stockpiles of goods and giving a lift to prices. The country's consumer price index rose 0.1 percent year-on-year in the first quarter, indicating that China's two-year-long slide in prices is bottoming out, economists said. However, China's retail price index dipped by 1.9 percent year-on-year over the same period. "We know that exports are gradually reflating the economy, leading to increased capacity utilization and easing deflation," said Andy Xie, China economist at Morgan Stanley Dean Witter. Fixed asset investment growth, which was flat in the second half last year, also recovered. State sector fixed asset investment surged by 8.5 percent year-on-year to 223.5 billion yuan (US$27 billion) in the first quarter. Liu Chengxiang of China's statistics bureau said that money was funneled into infrastructure projects, upgrading the technology at state-owned firms and the real estate sector. But that money is coming out of government coffers, fuelled by a 60 billion yuan (US$7.25 billion) special treasury bond issue at the end of last year and debt from this year's budget. No separate figures are published for private sector investment. Anticipation of China's entry into the World Trading Organization (WTO) could buoy a recovery in foreign investment in coming months but while full-blown recovery looks increasing possible, it is far from assured, pundits said. Foreign direct investment (FDI) slid by 2.7 percent year-on-year in the first quarter, although FDI rose by 10.3 percent in March from February, breaking a prolonged downward slide.
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