1998 is an extraordinary year when China had to face complex and severe domestic and international economic environment in its economic development. Under the correct leadership of the Central Party Committee and the State Council, Chinese people implemented a series of policies and measures aiming at increasing input and expanding domestic demand to deepen further reform in various areas and promote economic growth, resulting in great achievements that attracted worldwide attention. The National Bureau of Statistics issued today the Statistical Communiqué of the People's Republic of China on the 1998 National Economic and Social Development, which illustrates that the performance of the national economy in general was encouraging, and the targets of reform and development for 1998 were basically met. Following are the features of the economic and social development:
1. Fairly fast growth of the national economy. Affected by the Asian financial crisis and the severe floods in the summer, the economic growth of China declined slowly during the first half of 1998. The growth of GDP for the first quarter was 7.2 percent and that for the first 6 months was 7 percent. Under such circumstances, the Chinese government adopted active fiscal policies to expand the domestic demand and to stimulate the pick-up of the economy. The GDP of the whole year was 7,955.3 billion yuan, up by 7.8 percent over the previous year.
2. Steady development in industrial and agricultural production. China was hit by exceptionally severe disaster of floods and waterlogging in 1998. Nonetheless, good harvest was achieved in agriculture as a result of the joint efforts of people all-over China to reduce the loss caused by the disaster, and thanks to the favorable weather conditions in the autumn.
The growth of the industrial sector was slow during the first 6 months. Stimulated by factors such as increase in the investment, the industrial growth was accelerated since September. In 1998, the total value-added of the industrial sector was up by 8.9 percent over the previous year. Of this total, the growth of state-owned enterprises and joint-ownership enterprises where state held the controlling share was 4.9 percent. The industrial production remained to be the key driving force to China's economic growth.
3. Rapid growth of investment in fixed assets. One of the key aspects of the macroeconomic policy of China in 1998 was to expand the investment demand and to speed up the construction of infrastructure facilities. The growth of investment in fixed assets was accelerated along with the implementation of such policy. Preliminary statistics showed that the investment of state-owned units rose by 19.6 percent. If investment by urban and rural collective units, by individuals and by other economic entities are added in, the completed investment in fixed assets of the country in 1998 was 2,845.7 billion yuan, representing an increase of 14.1 percent over 1997. The significant increase in the investment has played a noticeable role in pushing up the economic growth.
4. Slowed growth of foreign economic relations. The growth of export slowed down significantly to 0.5 percent over 1997 as a result of Asian financial crisis, and the weak domestic demand led to a 1.5 percent decline in China's import. Some growth was scored in foreign direct investment in China, with the actual capital utilized amounting to 45.6 billion US dollars, up by 0.7 percent.
The exchange rate of Renminbi remained stable, which stood at 1 US dollar = 8.2789 RMB yuan at the end of December, an appreciation of 9 basic potions as compared with that at the end of 1997. Not only important to the Chinese economy, a stable Renminbi also played positive role in stabilizing the Asian and the world economic development. By the end of December, China's foreign exchange reserve amounted to 145 billion US dollars, or 5.1 billion US dollars more than the figure at the end of 1997.
5. Steady growth of market sales. The total volume of retail sales of consumer goods in 1998 was 2,915.3 billion yuan, up by 6.8 percent over 1997. If the decline in prices is taken into consideration, the real growth would be 9.7 percent. The general level of market prices continued to drop. The average retail prices of commodities went down by 2.6 percent, and the consumer prices dropped by 0.8 percent. Analyzed by categories, prices of food items declined by large margin, prices of most consumer goods dropped although prices for selected items increased, and prices of housing and services continued to grow.
6. Stable increase in the income of urban and rural households. The annual per capita disposable income of urban households was 5,425 yuan in 1998, a real increase of 5.8 percent if prices change was taken into consideration. The per capita net income of rural households was 2,160 yuan, a real growth of 4.3 percent.
7. Robust performance of the banking system. Appropriate growth was seen in money supply in 1998. By the end of the year, the money supply of broad sense (M2) rose by 15.3 percent over the previous year, and that of narrow sense (M1) was up 11.9 percent. The cash money in circulation (M0) increased by 10.1 percent. Savings deposits in various forms increased by 16.1 percent as compared with the figure at the end of 1997, and the loans from banking institutions rose by 15.5 percent. The robust performance of the banking sector promoted the economic development.
8. All-round development of social undertakings. Along with steady economic growth, new progress was registered in science and technology, education, culture, public health, sports and environment protection.
Despite the impact of the Asian financial crisis from the overseas and the damage caused by the severe floods at home, China's economic growth remained high and the Renminbi stood stable. These were no easy achievements, which demonstrated that the policies adopted by the government aiming at expanding domestic demand were correct, and that the operation of macroeconomic regulation was successful.
At present, many difficulties and problems remain in the economic and social development. They include: the excessive production capacity in most of industries due to years of duplicated constructions, resulting in the over-supply of products and the irrational economic structure; difficulties encountered by some of state-owned enterprises in their production and management, as was reflected by the still poor economic efficiency of such enterprises; the slow growth of farmers' income; the pressure of ensuring basic living conditions and reemployment of laid-off workers from state-owned enterprises; the sluggish market sales, in particular that on the rural markets; and the financial risks as accumulated over the past years that could not be neglected.
In 1999, we might encounter problems and difficulties of this or that type in the course of development. However, the economic development of China is of great potential and is endowed with many advantages. It is our believe that, so long as we can seize opportunities, keep forging ahead and make full use of advantages while avoiding disadvantages, the national economy is bound to maintain its sustained, healthy and fast development with improved quality.