How to view the near-double-digit fast growth

As each quarter draws to an end its economic growth rate catches the attention of all circles. According to authoritative departments China's economic growth rate in the first half of the year would approach 10 percent. With the intensified macro-controls as backdrop this economic growth rate has an unusual meaning and gives rise to profound thoughts.

Near 10 percent - the highest economic growth rate in the corresponding periods since 1997

In 1992, driven by a new round of development wave China's economy cast off the downturn and the growth rate jumped from 3.8 percent in 1990 and 9.2 percent in 1991 to 14.2 percent. In 1993, 1994 and 1995 the economic growth kept at two-digit speeds.

Faced with the concomitant problems such as economic overheating and inflation, the central government conducted timely macro-controls and implemented appropriately tight financial and monetary policies. With three years' efforts China's economic growth rate fell back to 9.6 percent in 1996 and successfully achieved "soft landing".

Since 1997 struck by the Asian Financial Crisis and influenced by inadequate domestic demand the growth rate began to fell. It was 8.8 percent in 1997 and dropped to 7.1 percent in 1999. Though it managed to fight back economic growth rate stayed at 8 percent or lower until 2002. In order to effectively drive economic growth, since 1998 the central government has stuck to the guideline of expanding domestic demand and pursued pro-active financial policy and prudent monetary policy in order to curb the deflation trend.

In 2003 China's economic vitality boosted up considerably and growth rate rose to 9.1 percent. There was a consensus in the economic circles that the economy entered a new cycle of prosperity.

Continuing the strong growth momentum the economy, driven by the growing internal vitality and the leading investment needs, achieved a growth close to 10 percent in the first half of this year. This is a natural continuation of the prosperity cycle starting in 2003.

It may be said that the fast economic growth since last year is an inevitable result of years' accumulation. It is a new trend brought about by the joint effect of economic factors. This climbing period during the new round of economic growth cycle must be especially cherished.

The fast economic growth has its logical elements and is heading toward the expected objective under the macro-controls

As an important driving force of China's economic growth in recent years investment in fixed assets keeps a robust growth. Under the influence of the macro-control policies and measures investment in the first five months still increased 34.8 percent. In the latter half of the year growth rate would continue to fall. However, since the scale of constructions that are still going on is very large and there are many newly-started projects, investment will still keep a relatively fast growth and its driving effect on economy won't slow considerably.

As the ultimate driving force of economic growth the consumption market is stable and showing trend of prosperity. As the central government's policy support of agriculture, rural areas and farmers is gradually implemented and grain prices assume a comeback rise, the growth of farmers' per capita income during the second quarter would probably approach or reach a two-digit rate. In the cities housing and automobile consumptions continue to grow rapidly. According to authoritative economic research departments total retail sales during this year would increase by about 12 percent. The figure in 2003 was 9.1 percent.

China has just started on a new journey to build a well-off society in a comprehensive way. In 2003 per capita GDP for the first time exceeded $1,000 and China entered a new stage during which industrialization and urbanization development speeds up and consumption structure rises from the development mode to the enjoyment mode. High growth industry groups such as housing, automobile and electronic communications are becoming main driving forces of industrial upgrade and economic growth. Meanwhile local governments at various levels have just completed elections and the initiative to change appearance and speed up development is very high. The fast economic growth, therefore, has its logical elements.

Regarding the problems in the operation of economy such as investment grows too fast, monetary credit expands too strong, prices of basic products rise too high and the supply situation of coal, electricity, oil and transportation is strained, the central government has put forward a series of macro-control policies since the latter half of last year. Now the trend of investment over-growth has been curbed, monetary credit growth has slowed considerably, price rises of basic products have been contained, agricultural production shows a "turning point" and production growth in some overheating industries has slowed down. The unstable and unhealthy elements in the economic operation have been curbed and the national economy continues to grow rapidly.

Indices of national economy are inconsistent, structural imbalance very acute and macro-control task still heavy

As a matter of fact macro-control policies had shown evident effects during the second quarter. Experts explained that during the corresponding period of last year China was plagued with the SARS and the growth rate for the second quarter was only 6.7 percent. A low base led to a high economic growth during the first half of this year.

It shows, on the other hand, that the task of macro-controls is still very heavy. China's economy, while growing at a high speed, has inconsistent indices. Structural imbalance is rather acute. Therefore demand for adjustment of economic structure, change of growth mode and reform of system drawbacks is growing urgent.

From the macro-level viewpoint overheated investment and lukewarm consumption have become an acute contradiction. In recent years China's consumption growth has shown a continued downward trend. Since 1997, when it dropped to 10.2 percent from 20 percent four year ago, total retail sales growth rate has since remained under 10 percent.

From the viewpoint of economic operation China's economic development has obviously exceeded the bearing capacity of resources and energies. During the first six months electric energy production reached the highest level since 1975. However, 24 provinces and regions still had power outages. The gap during the third quarter would probably exceed 3,000 kilowatt.

In major industries the situation is not the same. Industries such as iron and steel and cement are overheating whilst agriculture, public undertakings and catering industries are cold. During the first quarter investment in iron and steel and cement industries increased by 107.2 percent and 101.4 percent year on year respectively. By contrast investment in primary industry increased by only 0.4 percent. For years the proportion catering industries accounts for in China's GDP stays around 33 percent. It is even lower than the average level in world low-income countries.

Experts point out current implementation of aggregate quantity control is absolutely necessary. It is more important, however, to pay attention to economic structural adjustment. We should not only give special support to agricultural and grain production but also strengthen the development of public welfare undertakings such as social welfare, health system, education and science and technology as well as catering industries. Experts predict that as macro-control policies and measures are further put to effect economic growth during the latter half of the year would gradually slow down, overheated industries would continue to cool down and economic growth is expected to stay at a reasonable level acceptable to the various sides.

By People's Daily Online