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China's economy sped up late last year, expanding 9.1 percent for its best performance since 1997 and with more in store this year, the government revealed.
Gross domestic product surged 9.9 percent in the fourth quarter of 2003 year-on-year and for the whole of 2003 grew 9.1 percent, which was the fastest annual growth rate since 1997.
The National Bureau of Statistics (NBS) said gross domestic product was 11.6694 trillion yuan (US$1.414 trillion), up 9.1 percent. Per capita gross domestic product was US$1,090.
Growth in 2002 was 8 percent. The NBS's Web site, www.stats.gov.cn, showed that growth in 1997 was 8.8 percent. In 1996 it was 9.7 percent.
The NBS head Li Deshui said:" It was a hard-won successful achievement after the outbreak of the SARS epidemic and frequent natural disasters."
Despite the positive picture, Li warned that China's GDP in the first quarter of 2004 will probably slow from the fourth quarter's 9.9 percent -- but it will not be a "dramatic decline."
Li gave a conservative forecast for GDP growth in 2004 at "over seven percent" but stressed China will continue the trend of rapid growth of recent years which has made it the fastest growing major economy in the world.
"I believe we'll still keep the momentum of fast growth," Li said, citing the large number of infrastructure and other investment projects launched last year which will continue into 2004, as well as stable consumer demand.
He rejected concerns that China's economy may be overheating. Abrupt changes to economic policy were unnecessary, he added.
Li acknowledged that the seven-year-high growth since 1997 was driven mainly by surges in capital investment. However, one indicator of overheating, inflation, has been under control, with the benchmark consumer price index only 1.2 percent higher in 2003 than in 2002.
Although inflation has picked up, to 3.2 percent in the 12 months through December, the increase was due almost entirely to higher food prices that offset falls in most manufactured goods.
Most economists say inflation in the low or middle single digits is not a problem for China.
These major indicators showed that the economy should not be considered to be overheating, Li said.
But he admitted that certain areas and certain industries did appear to be overheating, citing a rapid increase in bank loans, duplicated construction and copycat investments with many regions following the same path to growth, such as real estate investment.
Steel consumption, for example, was too fast, said Li. China consumed 36 percent of the world's total steel supply, 30 percent of coal and 55 percent of cement last year, reflecting low efficiency compared with the developed nations. Shortages emerged in electric power, coal, petroleum and transport supply, forming new bottlenecks in the economy.
In order to cope with these problems, Li went on, the Chinese government had taken a series of measures to guide the economy in the direction of inclusive, coordinated and sustainable development.
This year and in the years ahead, China would seek rapid economic growth along with a balance between social and economic development, Li said. _
Li said that China's export growth rate would slow in 2004, after a rise of 34.6 percent in 2003 to a record US$438.37 billion, due to a reduction in export tax rebates and increased protectionism, but would then bounce back.
Imports surged 39.9 percent to US$412.84 billion and are expected to continue growing this year.
Rural income continued to grow at a significantly lower rate than urban income, increasing by 4.3 percent compared to 9.3 percent in cities, reflecting a widening wealth gap.
That highlighted slower growth in the agricultural sector, which Li attributed to a host of natural disasters including drought in the south. The sector grew by 2.5 percent, compared to 12.5 percent for industry.
The service sector grew by only 6.7 percent -- a reflection of the impact from SARS, Li said.
Urban unemployment reached 4.3 percent by the end of December.
Experts said, the Chinese government, concerned about a widening rich-poor gap and uneven development between the prosperous coast and lagging interior, is expected to shift spending more toward social services rather than direct economic stimulus.
This year Beijing is expected to ease back on state spending and take further steps to cool lending to industries seen in danger of overheating -- building up too much capacity that would leave them with excess debt and unsold products, raising the risk of business failures and damage to the rest of the economy.
(China Daily January 21, 2004)
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