During the period, the country has maintained a stable exchange rate and achieved robust growth. But the current challenge for the country is maintaining high growth rates in a less expansionary fiscal and monetary environment, according to ADB's report.

"China's economy maintained a hefty growth of 8.1 percent in the first quarter. China saw a fast growth of farmers' incomes, an acceleration of industrial production and a surge in the fiscal revenue," said Tang Min, chief economist with ADB.

"These growth figures were better than we had expected," he stressed.

But growth is likely to slow in the next three quarters due to the global economic slowdown, oil price hikes and reduced gains from reforms of State-owned enterprises, he pointed out, adding that salary increases may, however, contribute significantly to the growth of gross domestic product (GDP) as it will stimulate domestic consumption.

The report's GDP projections for this year and 2002 represent an easing off from the 8 percent achieved in 2000.

"Domestic consumption will remain strong. But rising oil prices will push up production costs and food prices could also rise slightly in the first half of 2001 after a fall in grain production in the second half of 2000," said the report.

Foreign direct investment (FDI) will increase by a large margin this year and is expected to contribute 4 percentage points to this year's GDP growth, the report forecasts. In 2000, FDI increased by 1 percent and contractual foreign investment was up by 51 percent.

Thanks to a recovery by the countries affected by the Asian financial crisis and strong growth in the US economy, exports from China surged in 2000 by 27.8 percent to US$249 billion, while imports soared by 36.8 percent to US$217 billion.

(Xinhua 04/26/2001)