Growth Helps Rapid Recovery from SARS

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Last updated at: (Beijing Time) Friday, July 18, 2003

Growth Helps Rapid Recovery from SARS

The 8.2 per cent growth in gross domestic product in the first half of this year is an inspiring reply to the SARS situation that marred China's economic picture for months.

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The 8.2 per cent growth in gross domestic product in the first half of this year is an inspiring reply to the SARS situation that marred China's economic picture for months.

The country's GDP totalled 5 trillion yuan (US$604 billion) in the first six months.

Though less impressive than the 9.9 per cent growth of the first quarter, the half-year performance is still sound enough to bolster confidence in a quick recovery from severe acute respiratory syndrome.

The fallout of SARS was clearly manifested by the slowing in the GDP growth rate, which fell to only 6.7 per cent in the second quarter.

Yet, as the economy bottomed out briefly in June, the country has unequivocally come through its moment of truth, defying pessimistic forecasts at home and abroad.

The government's resolution and all-out efforts in the fight against the potentially fatal virus while priming the pump have certainly helped keep the economy going through the hard times.

In the first half of this year, investment became the economy's leading growth engine.

Total investment in fixed assets exceeded 1.9 trillion yuan (US$233 billion), up 30.1 per cent over the same period last year. This was the fastest rate since 1994.

Another major growth factor was foreign trade, despite the sluggish world economy.

China's exports went up by 34 per cent between January and June compared to the same time last year, reaching US$190.3 billion. Imports grew even more rapidly, jumping 44.5 per cent year on year to US$185.8 billion.

Consumption suffered most from the SARS onslaught. This third growth engine was long subject to lingering deflationary pressure in recent years. People spent even less during the SARS outbreak.

As a result, growth in retail sales of consumer goods dropped from 9.2 per cent in the first quarter to merely 6.7 per cent in the second.

But pent-up consumer demand means the rate will likely bounce back in the second half of this year to power economic expansion and thus give the Chinese economy extra momentum.

Halfway through the year, the latest statistics square well with renewed optimism that the Chinese economy will beat the odds to achieve U-curve growth this year.

To keep the country's long-term growth continuing, we should focus our efforts on meeting the challenges on the way ahead.

The mounting international pressure to revalue the renminbi is compelling proof that the country's export-growth pattern has to change in the light of global market conditions.

Domestically, there are already signs of overheating in some booming sectors, such as the real estate business. Aggressive supervision and subtle regulation are needed to squeeze out any bubbles while maintaining the dynamism of these crucial sectors.

In the meantime, an equally if not more urgent task that we have to undertake earnestly is shifting from overstressing robust growth to emphasizing balanced development in a broad sense in the country's pursuit of progress and prosperity.

The SARS epidemic has effectively exposed how vulnerable many aspects of our society are when it comes to handling a crisis.

All-round social development entails sound economic growth. The hard-won growth in the first half of this year evidently underpinned the country's initial triumph over SARS.

To secure a final victory, however, we should take overall development to heart as we press ahead with our economic undertakings.

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