A good opening for national economy,
further efforts to expand domestic demand

Effects have been emerging with the implementation of various policies for expanding domestic demand. In the first quarter this year, the national economy grew at the rate of 8.3%, keeping the rising momentum appeared third quarter last year. The characteristics of the economic performance in the first quarter:

1. Fast increasing investment in fixed assets, bettering investment structure. Investment in fixed assets (exclusive of investment made by collective and individual enterprises) rose as high as 22.7% as compared with the same period last year, keeping the large increasing margin appeared in latter half last year.

2. Industries growing at a high speed, efficiency increasing significantly. Pushed by the investment demand, industrial added value increased by 10.1% as compared with the same period last year. The sales ratio for the first three months is 94.63%, while the same ratio for March alone is 96.34%, the highest ratio for the same period in recent years. Profits of the enterprises rose significantly. The aggregated profits of the manufacturing enterprises was 11.27 billion RMB yuan, six times more that the same period last year, or roughly the same level for the same period in 1997. SOEs and state holdings operated at a surplus of 0.95 billion RMB yuan, a sharp contrast with a loss of 5.46 billion the same period last year. This is a good start for the realization of turning losses into profits in the SOEs.

3. Increasing sales volume of consumer goods. The sales volume in the first three months this year was 760.4 billion RMB yuan, 7.4% higher than the same period last year, or 10.6% in real terms.

4. Large-margin revenue increase, more financial support to economic growth. Domestic revenue in the first quarter was 232.4 billion RMB yuan, a 26.1% increase than the same period last year. A stable monetary policy was carried out, and more loans were made. The exchange rate of RMB was stable. It is estimated that the growth rate for the first half of this year will be around 8%, and growth target for the whole year can be reached. The major problems that affect the sustained, rapid and sound economic growth are tough export situation, less flowing - in foreign capital, low investment by the collective and individual enterprises, slump domestic market, and continuously decreasing commodity price.

Measures addressing the above-mentioned problems:

1. Make more investment in infrastructure. Some 30 billion RMB yuan will be invested into the construction of agriculture, forestry and water conservancy facilities. An additional 25 billion will be allocated to the projects under construction in transportation, communications, electricity grid upgrading in rural areas, grain storage facilities under the direct management of the central government, and urban infrastructure. On the basis of industrial upgrading, we will launch some new projects that can improve technological level, promote industrial upgrading and the production of new products, and that will have a market after operation.

2. Stimulate domestic demand by making great efforts. We will increase the income level of the residents with medium and low income. Special efforts will be made to increase farmers' income by every conceivable means. The income of public servants will also be increased. We will also make adjustment in consumption policy and standardize fee-collecting practice. Housing reform will be further pushed on. Measures will be stipulated to develop consumer credits in a stable manner. Efforts will also be made to expand the development of tourism and community services, the industrialization of culture and physical education, non-compulsory education and non-basic medical care. In rural area, the emphasis will be the opening-up of local market, the upgrading of rural electricity grid, and the construction of infrastructure such as water supply and highways.

3. Expand exports by every possible means at the same time stimulation domestic demand. We will deepen the reform in foreign trade system, transfer the system of examination and approval to the system of registration for record. Restrictions on non-SOEs in trading rights will also be lessened.