Chinese President Hu Jintao said at the APEC leaders working luncheon in Santiago Chile that Chinese economy would maintain steady and fast development next year. Overheating of the Chinese economy predicted by some people would not happen, nor would a "hard landing" that some are concerned about.

These inspiring words have their firm basis. According to the actual economic development of various countries in the world once the per capita GDP in a country reaches $1,000 its economy would have qualitative change and enter a phase of sustained and rapid growth. In China per capita GDP exceeded $1,000 in 2003. So the initial conclusion is that the Chinese economy has entered a phase of sustained and rapid development. The author's general judgment of Chinese economy in 2005 is also optimistic. The internal drive of economic growth is enhancing and the good and sustained development of economy would not change for next year. The Chinese economy has completed a 10-year period adjustment and entered a new growth cycle. It is estimated that in the next few years China's economy would maintain a sustained and rapid growth. The fact that per capita GDP has exceeded $1,000 by itself is an internal sustaining factor for the new growth cycle.

The second sustaining factor is that the combination of China's comparative advantages such as accession into the WTO, successful bidding as the host of Olympics and World Expo and human capitals will continue to power the strong inflow of foreign investment. China's accession into the WTO brought its development to a new phase. Foreign investment has a clearer anticipation of China and China will also blend deeper into the world economy. Successful bidding as the host of Olympics and World Expo further reinforces the confidence of foreign investment.

The third sustaining factor is that consumption structure is still being rapidly upgraded and relevant industries are developing at high speeds. Commodities such as automobile, housing and information products are speeding up their pace of entrance into the household. Service consumption such as education and tourism are also heating up. The upgrade of consumption structure powers the rapid development of relevant industries and forms a group of fast-growing industries. This trend will not change in the year 2005.

The forth sustaining factor is the accelerated pace of urbanization. Since the beginning of this century China's urban construction has developed into a fast track and is currently at the phase of accelerated progress. Thanks to its good accumulation effect and huge talent flow, capital flow, materials and information flow the city displays strong vitality. The rise and expansion of cities entails the construction of much infrastructure; the expansion of urban population will lead to huge demand for real estate; tertiary industry in cities will also prosper due to the amassing of population; huge market demand and consumption growth would be created by raising the income level of rural residents to that of urban residents; urbanization will also bring with it the optimization of labor resources allocation and market scale; in China urbanization is also the key of final solution of the "three rural" questions (agriculture, farmers and rural areas).

Besides China adds new college graduates of about 4 million to 5 million each year. Since the proportion of college graduates among retirees is very low China's talent aggregate will increase each year in general and the quality of talents will keep improving. The increase of persons with ability and improvement of quality will lead directly to the growth of productivity and boost economic growth. This is another strong sustaining power for better development of the Chinese economy.

Three other sustaining factors can neither be neglected. Macro-control prolongs economic boom cycle and averts economic fluctuation, which creates conditions for maintaining the sound economic operation for a relatively long time; the initiative of local governments and private enterprises for development is still very strong which is an indispensable agent in the economic life; high domestic saving rate provides firm support for economic development. It is believed that absent unforeseeable events we have every reason to be optimistic about the future of the Chinese economy.

This is a translation by People's Daily Online of an article by Liu Huangsong, director of the Economic Climate Research and Forecast Center of the Shanghai Academy of Social Sciences