Despite the frustration of the outbreak of the severe acute respiratory syndrome (SARS) epidemic, China's economy maintained the same vigor as previous years, with even stronger internal drive.

The growth of private investment exceeded that of government investment this year while the consumer price index began increasing for the first time in years.    

The consumer price index rose 3 percent in November on a year-on-year basis, compared with an average of 0.3 percent in January and February.

Gross domestic product (GDP) for the first three quarters totaled 7.9 trillion yuan (US$956.6 billion), up 8.5 percent, according to the National Statistics Bureau (NSB).

The country expected an annual GDP growth of 8.5 percent this year, said Qiu Xiaohua, the NSB deputy director.

Industry reported a total added value of 2.88 trillion yuan (about US$ 350 billion) in the first three quarters, a year-on-year rise of 16.5 percent while government revenue rose by 22.5 percent.

The proactive fiscal policy has been carried out for six straight years in China since the Asian economic crisis in 1998 while government investment, such as treasury bonds, has been the engine for Chinese economy.

The government has issued 800 billion yuan (US$96.74 billion) in treasury bonds since 1998.

Nevertheless, the things have changed this year.

In the first eight months, government investment accounted for 5.1 percent of the total investment, down from 14 percent in the same period of 1998.

Investment in fixed assets in September was 6.3 percentage points down from June and was likely to go on falling in the fourth quarter, said Ma Liqiang, director of the economic operation monitoring bureau of the State Development and Reform Commission (SDRC).

During the first 11 months, state-owned and state-holding companies reported 347.4 billion yuan (US$41.9 billion) in profits whereas shareholding and foreign-funded companies earned 331.8 billion yuan (US$39.9 billion) and 239.7 billion yuan (US$28.9 billion) respectively.

The internal drive in part came from the growing demand of Chinese consumers resulting from continuous economic growth in the past decade, said Fan Jianping, an expert with the State Information Center.

The past decade's growth had laid the foundations for a significant jump in consumer demand in urban areas, Fan noted.

The NSB predicted that China's GDP per capita was likely to top US$1,000 for the first time ever this year and GDP to top 11 trillion yuan (some US$1.33 trillion).

Consumer demand had undergone a major shift from daily necessities like food and clothing to houses, luxury cars and telecommunications, he added.

Commercial house sales increased by 43.9 percent and car sales by 77.1 percent in the first seven months of this year over the same 2002 period.

The government should go on striving to create a fair and favorable environment for non-state capital and companies by speeding up the reform of administration and continuing to lower market entry requirements in an effort to maintain the internal drive, said Li Boxi, a noted expert with the Development Research Center of the State Council.

The Chinese government would readjust the direction and change the structure of investment funded by treasury bonds, as it would continue to implement a proactive fiscal policy for the near future, Minister of Finance Jin Renqing said on Dec. 24.

Jin noted that treasury bond funds would go towards economic restructuring and balanced development next year.
 
(Xinhua News Agency December 31, 2003)