"China is on the right track to realize its set economic goals," said Yan Xianpu, a senior economist with the NBS. "This year's GDP growth rate could even be higher than that of last year."

China's GDP growth was 7.3 percent last year. It might be 7 to 8 percent this year, he said.

China's foreign trade has registered a positive performance in the first half of the year, thus suggesting overall economic growth will exceed 7 percent, Yan added.

"The sizzling global economic recovery has come earlier than expected, which, in turn, has created a sound external environment for China's economic development," Yan stressed.

Total import and export volume is expected to rise by 12 percent, while exports may increase 13 percent in this period, he said.

Foreign direct investment (FDI), according to NBS statistics, grew by 12.4 percent to hit US$16.9 billion in the first five months of the year.

Based on the performance of China's foreign trade and FDI in the first half of the year, the country's external commerce will keep a robust growth in the following months, he said.

China plans to issue 150 billion yuan (US$18.1 billion) worth of treasury bonds this year, and this huge State expenditure will be used in a number of large infrastructure projects to boost the domestic market.

Investment in fixed assets witnessed an accelerated swell in the first half of the year, which is likely to increase by 25 percent compared with the same period last year, he said.

Industry also expanded rapidly. In the first six months of the year, the added value created by large State-owned enterprises and non-State firms is expected to rise 11 percent compared with the same period last year.

Domestic consumption, which has become a growth engine for China's economic development in recent years, was also said to be a major driving force for the GDP growth in the first half of the year.

While the domestic market of consumer goods saw slightly slower growth, the total retail sales of consumer goods rose by 8.6 percent in the first six months.

Yan added that China's large population of 1.3 billion has impeded the swift and thorough implementation of the country's economic reforms, but it has guaranteed a huge domestic market with vast potential for development.

Despite certain problems - such as a high unemployment rate, growing income gap, deflation and a slow rural income growth - that will continue to pose challenges for the country's economic development, many local economists believe the annual GDP growth will surpass 7 percent as planned.

The past several years have indicated that at least a 10 percent industry growth rate will very likely guarantee the GDP to hit 7 percent, Yan said.

Yan also noted that policy stability will ensure China's economic growth this year. The Communist Party of China will summon its 16th national congress this autumn. Most believe that economic development will be further addressed at the meeting, and this positive expectation will help stimulate the country's business activities.

"The economy's steady growth, however, should not blind us to the negative signals," Yan said.

The sluggish growth of rural residents' income has negatively influenced the growth of domestic demand and will inevitably intensify deflationary pressures on the national economy.

Continuously decreasing average prices are expected to be another problem.

(People's Daily July 9, 2002)