Chinese economy keeps high-speed growth in 2004, Experts predict

Home>>Business

Last updated at: (Beijing Time) Wednesday, January 21, 2004

Chinese economy keeps high-speed growth in 2004, Experts predict

DISCUSSION

CHINESE

SEND TO FRIEND

There may be a little downturn China will however keep its economy on the track of rapid development. This is a conclusion reached in general by many Chinese economists when predicting the economic trend of 2004.

Chinese Academy of Social Sciences (CASS) predicted in the Blue Book of 2003 that the growth rate of the Chinese economy in 2004 would approach 8.5 percent. Though a little bit lower than that of 2003 it still remains within the scope of rapid growth.

According to the "Ten Predicted Reports of Chinese Economy 2004" recently released by State Information Center (SIC), in 2004, the Chinese economy would follow the track laid down in the previous year and keep on a trend for a rapid growth. National economy is expected to grow by 8.5 percent and economic growth cycle is rising from recovery to flourishing stage.

Investment, export and consumption have always been regarded as the three motive forces of Chinese economy. In 2003 rapidly growing Chinese economy was fueled by investment. Investment in fixed assets during the first three quarters approached 3,435.1 billion yuan - up 30.5 percent over a year before and the highest in recent years. When interviewed by Xinhua News Agency Gao Huiqing, Member of Experts Committee of SIC, said economic growth in 2003 had laid a foundation for the investment in 2004. This year's investment growth rate would still be two figures. During the previous three-quarters of last year Chinese enterprises realized a total profit of 572.77 billion yuan - up 49 percent over a year ago. The rapid profit growth would be favorable for the expansion of corporate investment. In the meantime the accumulated effect of policies for many years as well as the combined effect of economic boom it has improved the development environment of private economy, which has been stagnant for a long time. Moreover, investment from private sectors showed a tendency for rapid growth. Gao predicted that growth of investment from private sectors would be about 19 percent. Its contribution to the growth of national economy would see a further rise.��

Due to the influence of some factors like trade barriers and China's policy of refunding taxes on exported goods the extraordinary developing export in 2004 would see a little slowdown. It is one of the major factors that would influence economic growth rate this year. However global economy is recovering after three years of readjustment and world trade growth is picking up speed. These would create more space for developing Chinese export market. Favorable environment for investment and cost-efficient workforce are factors that would attract huge amount of foreign investment and speed up the shift of world manufacturing industry to China. The general trend would not be changed by some temporary factors.

After joining the WTO the environment for China's export has improved considerably. Professor Li Xiaoxi of Beijing Normal University believes that the upgrade of export commodities would continue to push the optimization of trade structure. Mechanical and electrical products would still be the principal components of Chinese export. According to preliminary research China's export growth in 2004 would show considerable drop as compared with that in 2003. However total volume of export would make a breakthrough.

Statistics show the increase of consumption demand is determined not only by citizen's income level but by consumers' confidence as well. The confidence of consumers in turn is, to a considerable degree, conditioned by macro-economic situation and public trust in and reliance on the government. During recent years some regions of China adopted policies to encourage consumption. Cities like Guangzhou and Shanghai raised the basic standard for paying personal income tax in line with their respective circumstances. Encouraged by governments' policies Chinese citizens are gaining in personal consumption confidence and signs of acceleration in consumption demand is coming to show up. As experts estimate, with the upgrade scope of citizens' consumption structure continuing to expand, farmers' income to increase rapidly as expected and consumption policy system keeping on improving, consumption demand would continue to expand as did in the latter half of 2003. The growth rate of total retail sales would approach 10.3 percent and the growth due to the consumption is expected to rise.

Economists warned that problems, which have long haunted the Chinese economy, still remain prominent in 2004 such as the farmer's income being hard to increase and hard pressures of unemployment. Bank credit loans expand too fast. The problem of repeated construction at low level is now popping up again. Structural imbalance is made further severer. New changes come to show in the demand-supply relations of some staple agricultural produces like grain and cotton. The government should seize the opportunity to solve these problems in order to prevent the fluctuations of economy and maintain a rapid yet healthy development of economy

By People's Daily Online

Questions?Comments? Click here

9.1% surge epitomizes sound growth of Chinese economy

Foreign businesses cash in on Chinese holiday economy

Exploration rover "Spirit" lands safely on Mars ( 9 Messages)

Two major state banks to pilot joint-stock system ( 3 Messages)

China pondering its own "green card" system ( 16 Messages)

Roaring BMW: Was it "road rage" or an accident? ( 2 Messages)

Beijing's traffic no longer a headache by year 2008 ( 5 Messages)