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What's the Significance of 8.2%
China's 8.2% growth rate in its GDP during the first quarter has pushed China back up to the top of the list of the world's fastest growing economies. This growth rate shows that not only has China escaped the influence of the Asian financial crisis, but indicates that China's economy is starting to get back on track.
Compared with some years in the nineties, an 8.2% growth rate wasn't too high. But because this growth rate was achieved in an unprecedented complex domestic and international environment, it has a special significance.
Since 1993, the central government has become more familiar with the economy's macroeconomic controls, accumulated experience combating inflation and started to accumulate experience on how to keep deflation within limits. In 1993, China's economy grew overheated, investment demand and consumer demand both grew too quick. To address this problem, the central government decided to adopt a "soft landing" approach to cure inflation and the economy from overheating. Since 1998, the macroeconomic controls have shifted towards expanding domestic demand, using the monetary policy plus a combination of economic tools such as finance, taxes, prices and income, to encourage demand in investment, consumption and exports to push the economic growth rate.
8.2% presumes that the development of China's economy over the course of the year will have a good foundation. The year 2000 is the last year to complete the economic goals of the end of the century. A strong economy this year would have monumental significance for accomplishing the next strategic goals towards modernizing China. After growing 8.1% in the first quarter, China's economy grew 8.3% in the second quarter, reaching the economic goals set by the National People's Congress.
8.2% presumes that there will be a better external environment for the reforms of state owned enterprises. This year is the last year in Premier Zhu Rongji's goal of reforming state owned enterprises within three years. Since the start of this year, state owned enterprise reforms have made significant headway. 52.5% of state owned enterprises and large- and mid-sized enterprises with the state holding controlling stake are not losing money anymore.
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