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NO.6 (March 2, 2004)
2004/05/22



  • 9. 1% Growth in GDP: A New Starting Point for China's Economic Progress
  • Rejuvenation of Northeast Old Industrial Bases Accelerated
  • China Strives to Halt Spread of Deadly Bird Flu
  • 10.7 Million Hectares of Chinese Land Afforested in 2003
  • China and ASEAN Seek Mutually Beneficial Cooperation and Common Development



    9. 1% Growth in GDP: A New Starting Point for China's Economic Progress

    --In 2003, China's per-capita GDP, for the first time, exceeded US$1,000, indicating that the country's social consumption structure would move toward a development- and enjoyment-oriented pattern.
                 
           Last year, China's per-capita GDP exceeded US$1,000, for the first time, reaching US$1,090, said Li Deshui, director of the National Bureau of Statistics, at a recent press conference sponsored be the State Council Information Office. This marks that China has entered a new stage of economic development, he added.
       
           According to Li. with per-capita GDP exceeding US$1,000, China's social consumption structure is expected to move toward a development- and enjoyment pattern, with cars, computers and high-grade household electrical appliances entering more Chinese families and a growing demand for housing, especially the improvement of housing conditions. These rapid increasing consumption demands will surely propel the upgrading of industrial structures. Last year, China's car output and sales volume reached 2.069 million and 2.04 million units respectively, up 80.7 percent and 92.8 percent on the previous year. The number of newly added telephone subscribers totaled 112 million, with the figure equaling the combined population of Britain and France. By the end of last year, the total number of China's telephone subscribers had reached 532 million.
       
           China's heavy and chemical industries have also entered a period of rapid development, accompanied with swift progress in industrial restructuring and new and high technologies, Li said.
       
           Yao Jingyuan, chief economist of the State Bureau of Statistics, told the press that according to the process of economic development of various countries throughout the world, the achievement of US$1,000 in per-capita GDP suggests that the economic development of a country has crossed a new threshold. Take the United States for an example. Its per-capita GDP hit US$1,000 in 1941, which laid a foundation for its victory in World War II and following swift economic development. The Republic of Korea also entered a period of all-round rapid economic growth alter its per-capita GDP reached US$1,000 in 1977. In less than 20 years between 1977-95, its per-capita GDP jumped to US$ 10,000, with the speed of development during this period greatly exceeding that prior to 1977.
       
           The achievement of US$ 1,000 in per-capita GDP marks an important milestone for greater progress in the future, added Yao.
         
           Industry: Principal Force Propelling Economic Growth
       
           Last year saw extraordinary achievements in China's economic development, in spite of the impact of SARS. The country's GDP totaled l 1.6694 trillion yuan (more than US$1.4 trillion in terms of the current exchange rate), showing a rise of 9.1 percent on the previous year in terms of comparable prices and the most rapid increase since 1997.
       
           China's economy registered a good beginning in 2003, with the growth of GDP in the first quarter hitting 9.9 percent. In the second quarter, owing to the impact of SARS, the growth rate dropped to 6.7 percent. But rapid development was resumed in the third and fourth quarters, with the growth rate rebounding to 9.6 percent and 9.9 percent respectively. In terms of different industries, the added value of the primary industry rose by 2.5 percent to reach 1,724.7 billion yuan, with the growth rate declining by 0.4 percentage point owing to the adverse affects of natural disasters on agriculture. The added value of secondary industry increased by 12.5 percent to reach 6,177.8 billion yuan, with the growth rate rising by 2.7 percentage points. The tertiary industry saw a 6.7-percent increase in added value, with the total amount of 3,766.9 billion yuan showing a drop of 0.8 percentage point in growth rate owing to the impact of SARS.
       
           The industrial sector is a principal force to propel the rapid growth of China's economy, said Yao. The contribution made by the secondary industry to China's economic development in 2003 accounted for 79.1 percent, or 6.5 percentage point in the 9.1 percentage point. Among China's 39 main industrial sectors, manufacturing, metallurgical, machine-building, equipment and chemical industries make up more than 50 percent. Yao noted, "All this marks that China's industry has entered a stage dominated by heavy and chemical industries, which leads China's industrial economy to a new platform of growth and symbolizes that China's economy has entered a new period of growth."
                 
           Factors for Continuous Rapid Economic Progress
       
           Li Deshui predicted optimistically that China's economy would maintain rapid development in 2004, with the growth rate exceeding 7 percent.
       
           He said economic growth for the first quarter might drop slightly, but exports might decline by a big margin, owing to the rise of international trade protectionism on the one hand, and China's implementation of the new export tariff refunding system as of January I this year on the other. The latter calls for a process for Chinese export-oriented enterprises to adapt themselves to the new situation and for Chinese exporters and foreign purchasers to bargain on the price. In addition, some specific technological problems need to be further examined in practice. The decline in exports doesn't matter much, Li said, believing that the momentum of rapid progress would be resumed soon.
       
           Li listed six main factors for China's continuous rapid economic growth.
       
           --The great inertia of economic growth is unlikely to be reduced;
       
           --The macro-economic policies will remain consistent in 2004, with the continuous implementation of the proactive fiscal policy and the prudent monetary policy;
       
           --Great improvement has been made in the country's investment environment and infrastructure construction, which provides sound conditions for continuous rapid progress;
       
           --The country has a great demand and a strong desire for expediting development;
       
           --There is a good development strategy and a series of supporting measures that were proved feasible in 2003; and
       
           --The recovery of the global economy since the latter half of last year is conducive to accelerating China's development.
       
           Li stated that though he did not expect the country's economic growth for this year to equal last year's 9.1 percent, he believed the national economy would head toward the goal of all-round coordinated and sustainable development while maintaining a considerably high growth rate, along with the establishment and implementation of a scientific concept of development, a correct world outlook and a pragmatic style of work.
       
           GDP Accounting Measures Standardized
       
           According to Li, with the approval of the State Council, the State Bureau of Statistics has improved and standardized GDP accounting measures as of this year, in order to calculate and use the GDP figures in a more scientific way and to follow international accepted practices.
       
           Firstly, the accounting method of regional per-capita GDP has been improved. Per-capita GDP refers to the ratio of GDP with the average population in a given period. According to common international practices, the population refers to the permanent population in a given period, instead of the population China used to calculate on the basis of household registration.
       
           Secondly, the Chinese translation of regional GDP and related indicators has been standardized. GDP refers to gross domestic product in English. The Chinese translation of the term carries with it a national concept, irrespective of whether the indicator is referring to the production of the nation or a region. To make it precise, the expression of local GDP in Chinese will be adjusted as regional or local gross product.

           In addition, it is stipulated that the preliminary annual GDP estimates of each province, autonomous region and municipality should not be released before January 15 the next year, that estimates of the quarterly GDP should not be released before the 10th day the next quarter, and that in principle no monthly GDP estimates will be released by the state or any local authorities in the future.




    Rejuvenation of Northeast Old Industrial Bases Accelerated

           At a recent press conference sponsored by the State Council Information Office, governors of Liaoning, Jilin and Heilongjiang provinces briefed Chinese and foreign reporters on the measures and goals for rejuvenating old industrial bases in the three northeast provinces which once made great contributions to enhancing the country's national strength.
       
           Northeast China, endowed with rich natural resources and enjoying geographical and communication advantages, has conditions to rely on its own accumulated industrial and human resources to become one of the most competitive economic spheres in China's future economic development.
       
           Bo Xilai, governor of Liaoning Province, Hong Hu, governor of Jilin Province, and Zhang Zuoji, governor of Heilongjiang Province, respectively introduced each province's natural resources, industrial and personnel advantages, investment environment and the challenges they face. They encouraged domestic and overseas businesses to make investment in the northeast to join efforts with the three provinces to rejuvenate northeast China. Governor Bo stated that overseas investors have already acknowledged the prospects for the rejuvenation of the northeast. Prior to 2000, Liaoning absorbed US$2.2 billion in foreign investment annually. In 2002, however, the amount jumped to US$5 billion. This indicates that a good monlentum of investment in the northeast has appeared. Liaoning will focus on the development of raw materials, machinery and equipment industries. According to Governor Hong, Jilin Province will focus on the construction of five new and high-tech industrial bases involving auto, petrochemical, farm produce processing, pharmaceutical and optical electronic sectors. Governor Zhang told the press that Heilongjiang would build six industrial bases dedicated to equipment, petrochemicals, energy, foodstuffs, medicine and forestry, accompanied with efforts to develop modern agriculture and tourism.
       
           With regard to the role played by the financial sector in the rejuvenation of the northeast, Governor Bo said asset liabilities remain one of the prominent problems to be solved by Liaoning in its rejuvenation drive. Over the past few years, the province has pooled enormous efforts to solve this problem. Recently, the State Development and Reform Commission accounted the technological renovation projects for 100 enterprises in northeast China, which will involve a huge amount of state investment. According to Governor Hong, Jilin is drawing plans to reorganize assets and improve the structure of non-performing assets. Meanwhile, efforts will be made to attract new financial investors and establish joint-stock banks to help improve the quality of financial assets. In addition, the state will increase input in old industrial bases through the regulation of policy-oriented banks. Governor Zhang noted that since the central authorities made the policy decision of rejuvenating old industrial bases in northeast China, various financial institutions have rendered great support to Heilongjiang and the other two northeast provinces in capital input in technological transformation and other fields. Apart from various assistance inclined toward the northeast in such fields as state policies, treasury bonds and bank loans, the government is working out measures to support small and medium-sized, private and export-oriented enterprises in the northeast. Meanwhile, more branches of state-owned financial institutions and newly founded private banks have been established to help rejuvenate northeast old industrial bases.
       
           The Chinese Government made the great strategic policy decision of rejuvenating old industrial bases in northeast China in August 2003, with the goal of turning the northeast into an equipment manufacturing and raw material industrial base for China and the world at large. This gigantic program has ushered in a new era for the northeast which is projected to become China's fourth great economic growth point following the Pearl River Delta, Yangtze River Delta and the Beijing-Tianjin-Tangshan area.
       
           The program calls for early separation between government administration and enterprise operation, reduction of projects subject to administrative examination and approval and simplification of relevant procedures, and suspension of government administrative interference in enterprises to let them become real players in market competition. The Central Government will help state-owned enterprises solve a series of problems left by history that add much social, debt and personnel burdens to them, by means of granting them preferential policies in finance, taxation and other fields. Meanwhile, the social security system in the northeast region will be further improved.
         
           Reference Material: Northeast China
       
           Northeast China embraces three provinces (Liaoning, Jilin and Heilongjiang), which cover 790,000 square km in total land area (150,000 square km in Liaoning, 180,000 square km in Jilin and 460,000 square km in Heilongjiang) and have a combined population of over 100 million (41.47 million in Liaoning, 26.37 million in Jilin and 37.15 million in Heilongjiang). Last year, the three provinces registered 1,158.6 billion yuan in GDP, with Liaoning contributing 545.8 billion yuan, Jilin 224.6 billion yuan and Heilongjiang 388.2 billion yuan,
       
           The northeast is the cradle of New China's industry. Of the 156 key projects launched during the First Five-Year Plan period in the 1950s, 58 were located there. After many years of construction, a number of solid industrial bases have taken shape in the northeast, along with the emergence of such major industrial cities as Shenyang, Changchun, Harbin, Dalian, Anshan, Benxi, Fushun, Jilin, Qiqihar and Daqing. They have not only provided the country with huge amounts of materials and equipment, but also trained a large number of technological and managerial personnel for other parts of the country.
       
           The northeast is a major energy, raw materials, equipment manufacturing and national defense industry base of China. At present, the reserves of more than 40 mineral resources in the locality rank in the first three nationwide. Its output of crude oil, timber, motor vehicles, heavy-toad trucks and vessels accounts for 40 percent, 50 percent, 25 percent, 50 percent and 30 percent of the national total respectively. The region occupies a dominant place nationwide in the manufacturing of heavy-duty machinery and key ordnance products. The northeast is also one of China's major commodity grain production bases, with its output of commodity grain accounting for one-third of the national total. The region enjoys developed transportation facilities, with its railway and highway density coming first in the country.

           During the course of transferring the local economy from a planned to a market-oriented pattern, old industrial bases in the northeast have encountered numerous difficulties. The masses of local cadres and people, however, have persisted in carrying out reform and opening-up and made unremitting efforts to explore various ways to solve these problems, which greatly pushed forward the region's socioeconomic progress. The central authorities' strategic policy decision of rejuvenating old industrial bases in northeast China has brought new opportunities and hope for the region's further development.




    China Strives to Halt Spread of Deadly Bird Flu
       
           At a press conference sponsored by the State Council Information Office on February 5, officials from China's ministries of agriculture and health declared that China had found no human inflection with the H5N1 bird flu.
       
           According to Vice-Minister of Agriculture Liu Jian, since China reported the first case of the highly contagious bird flu on January 27, a total of 23 outbreaks had been spotted by February 4, including 18 suspected cases and five confirmed cases. Some 49,236 of the 56,417 inflected fowls had died, and 1.21 million others had been slaughtered. The epidemic has been contained in affected areas and no human infection has been discovered so far, said Liu.
       
           Liu told the press that the bird flue in China, characterized by sporadic outbreaks and relatively concentrated epidemic areas in central, east and south China, was dominated by the highly contagious H5NI strain which had taken a heavy toll of chickens and would affect ducks, geese and other water fowls. China still faces an arduous task to combat this deadly disease, given the facts that poultries are raised sporadically in the country, that the bird flu virus can be easily spread in winter and spring, that the country's animal quarantine system is weak, and that the Chinese are unfamiliar with both the disease and its prevention and control methods.
       
           Liu disclosed that the Chinese Government has called on relevant departments in various localities to strengthen medical monitoring and prevent the spread of the disease to humans. The government also requires the adoption of various preventive measures in affected areas and by persons exposed to the disease, and the supply of necessary preventive facilities. In addition, efforts will be made to enhance the public's sense of health security and to monitor vulnerable groups of people to ensure the early discovery, early report, early quarantine and early treatment of the disease.
       
           According to Vice-Minister of Health Wang Longde, since the outbreak of SARS last year, China's health authorities have intensified epidemic monitoring and report. At present, any suspected case identified by a county-level hospital can be reported directly to the Ministry of Health via the Internet.
       
           Wang revealed that immediately after the bird flu broke out on the mainland, health workers went to affected areas to observe people exposed to infected poultries. In Dingdang Town of Longan County, Guangxi Zhuang Autonomous Region, quarantine workers tested the temperatures of 31 people exposed to the epidemic twice a day and inquired them about any special symptoms. No flu case has been found among the 1,418 people monitored in various affected areas, said Wang.
       
           According to Wang, in recent years China has intensified cooperation with the World Health Organization (WHO) to monitor the spread of flu. Since April 2002, some 22,000 samples have been collected from flu patients, and 1,459 virus stems have been separated. To date, more than 80 percent of the virus stems used in the production of flue vaccines worldwide on the recommendation of the WHO are separated by China. This indicates that China has made a great contribution to the prevention of flu transmission among humans worldwide. No H5N 1 strain of the bird flu virus has been separated from these viruses.
       
           Vice-Minister of Agriculture Liu disclosed that China now exercises a daily bird flu epidemic report system and has regularized a four-level epidemic diagnosing process (clinical diagnosis by experts, confirmation of suspected cases by provincial-level laboratories, verification of virus strains by state-level laboratories, and confirmation and announcement by the Ministry of Agriculture).

           To continue the battle, the Chinese Government called on various localities and relevant departments to further improve and regularize their epidemic report and monitoring systems, as well as the measures to prevent and control the disease. Any cases should not be concealed or misreported, Liu concluded.




    10.7 Million Hectares of Chinese Land Afforested in 2003

    --In 2003, China afforested 10. 7 million hectares of land, with the coverage of annually afforested land exceeding 1 percent of the country's total land area for the first time. This suggests that China's forest coverage rate may be increased by 1 percentage point annually.

           According to the State Forest Bureau, China afforested 10.7 million hectares of land in 2003, including 9 million hectares of manually planted forests and forests created by aerial seeding and 1.6 million hectares of forests created on mountains through prohibition of hunting and grazing. Examinations confirmed more than 95 percent of these newly afforested areas and showed that more than 90 percent of them are up to standard. The afforestation boom in 2003, on the basis of a breakthrough of 6.6 million hectares in the previous year, made the coverage of annually afforested land exceed 1 percent of the country's total land area for the first time.
       
           Huge input has resulted in the rapid progress in China's forest building, said Zhou Shengxian, director of the State Forest Bureau. In recent years, the state has considerably increased investment in the forestry sector, with the amount in 2002 alone reaching 33.9 billion yuan, which nearly equaled the total (39.6 billion yuan) during the period between 1949-2000. In 2003, state investment in the sector totaled 42.9 billion yuan, up 26 percent on 2002.
       
           The huge input has not only ensured the rapid progress in afforestation, but also continuously enhanced the sector's industrial strength and scientific and technological level. A total of 135 large and medium-sized state-owned forestry enterprises have been established. The rate of contribution of science and technology to the development of forestry soared from 21.2 percent in the late 1980s to 30.3 percent in the mid- and late 1990s.
       
           While unprecedented importance has been attached to forest building following the huge input, the initiation of six key forestry projects has greatly boosted the sector's development. To meet the goal of raising the country's forest coverage rate to 20.3 percent by 2010, the country launched the six key projects between 1998-2002, including the natural forest protection project, the project of returning farmland to forests, the project to control the source of sandstorms in Beijing and Tianjin, the fourth stage of the shelterbelt development program in north, northeast and northwest China, shelterbelt construction along the upper and middle reaches of the Yangtze River, the wildlife protection and nature reserve construction program, and the construction of fast-growing and high-yield timber bases in key areas. The six projects cover more than 97 percent of the counties nationwide, with total afforested area expected to exceed 77 million hectares.
       
           Since the construction of the six key projects five years ago, the country has afforested 27.2 million hectares of land, including 3.72 million hectares of forests returned from farmland and 31.4 million hectares of forests created on mountains through prohibition of hunting and grazing. Effective protection has been extended to more than 93.33 million hectares of forests in natural forest conservation areas.
       
           "The achievements made in 2003 marked a milestone in the development of China's forestry," said Director Zhou. In addition to the 10.7 million hectares of newly added afforested area, tile forestry sector reported three other major events in the year--the accomplishment of researches on the strategy related to the sustainable development of China's forestry, the Decision on Accelerating the Development of Forestry made by the CPC Central Committee and the State Council, and the convening of the National Working Conference on Forestry, which deployed the forestry work in 2003 and the years to come.
       
           The three major events mark that China's forestry construction has entered a new period of development by leaps and bounds, with focus placed on ecological development. With regard to the guiding thought, emphasis has been changed from timber production to ecological development and from the lumbering of natural forests to that of man-made forests. In practice, farmland reclamation by deforestation has been replaced by forest rebuilding on reclaimed farmland, the free use of forest ecological returns has given way to their usage with remuneration, and the forestry department has given up its monopoly over the development of forestry and opened it to the whole society.




    China and ASEAN Seek Mutually Beneficial Cooperation and Common Development

    By An Min, vice-minister of commerce of the People's Republic of China

           ASEAN countries are good neighbors of China. In recent years, friendly relations between China and ASEAN countries have further developed, with mutual exchange and cooperation growing rapidly in political, economic, trade, scientific, technological and cultural fields. A good momentum has been formed in Sino-ASEAN relations, featuring politically mutual respect, economically mutual promotion and mutual trust in security cooperation. In last October, the seventh meeting of the leaders of China and ASEAN countries was held in Bali, Indonesia, in which China joined the Treaty of Amity and Cooperation in Southeast Asia to become its first non-ASEAN member. This has strengthened mutual trust and consolidated the political and legal foundation for the development of bilateral relations. Meanwhile, China and ASEAN announced the decision to establish strategic partnership oriented to peace and prosperity, and therefore, China has become ASEAN's first strategic partner. This is a move based on the development of bilateral ties in recent years to reposition Sino-ASEAN relations. It symbolizes that bilateral relations have advanced to a new stage and shows the direction of mutually beneficial cooperation between the two sides.
       
           On the basis of the smooth development of bilateral good neighborly relations, China and ASEAN have made new progress in economic and trade cooperation. ASEAN has become China's important economic and trading partner. Since 1990, the volume of bilateral trade has increased by 20 percent on an annual basis, with that in 2002 hitting a record high of US$54.8 billion, up 31.7 percent on the previous year and nearly 3 times on 1991. ASEAN has remained as China's fifth largest trading partner over the past 10 successive years, and is the largest trading partner of China among developing countries. The volume of trade between China and ASEAN is growing much more rapidly than that between China and its other trading partners. In the first l0 months of last year, the volume of bilateral trade registered sustained and rapid development, exceeding the total amount of the previous year to reach US$62.6 billion and showing an increase of 44.1 percent year on year. ASEAN has become the fifth largest export market and the fourth largest origin of imports of China. Alongside the rapid development of bilateral trade, the two sides have also achieved fruitful results in two-way investment, engineering project contracting and labor service. With the constant development of economic and trade relations between the two sides, their mutual interdependence in the economic field has increased, and a win-win situation pursued by both to achieve mutual benefit in cooperation began to emerge. China has pledged to join efforts with ASEAN to achieve the goal of raising the volume of bilateral trade to US$100 billion by 2005.
       
           Regional economic integration and economic globalization have become two major trends of the current economic development throughout the world. The leaders of China and ASEAN, making a correct assessment of the situation, made the wise and farsighted decision to establish the China-ASEAN Free Trade Area (FTA). On November 4, 2002, the two sides jointly signed the Framework Agreement on Comprehensive Economic Cooperation Between China and ASEAN, thus officially initiating the process to establish the FTA. At present, negotiations on the FTA are moving smoothly forward. Up to now, the China-ASEAN Trade Negotiation Committee has held 10 meetings. At the seventh meeting of leaders of China and ASEAN, the two sides signed the Amended Protocol of the Framework Agreement on Comprehensive Economic Cooperation Between China and ASEAN and decided to officially launch the Early Harvest Plan as of January 1, 2004. China is willing to accelerate negotiations with ASEAN in order to complete the establishment of the China-ASEAN FTA as scheduled. By that time, with most products from China and ASEAN members mutually enjoying zero tariff treatment and being exempt from non-tariff measures, liberalization will be achieved in bilateral trade.
       
           The projected China-ASEAN FTA, a result of the continuous development of Sino-ASEAN ties, reflects the two sides' common desire to strengthen good neighborly friendship and cooperation and also represents a realistic need for a closer China-ASEAN economic partnership, which facilitates the two sides' joint efforts to cope with the challenges brought about by economic globalization and regional economic integration. At the seventh meeting of the leaders of China and ASEAN held in last October, Chinese Premier Wen Jiabao proposed the holding of an annual China-ASEAN Expo (CAEXPO) in Nanning, capital of China's Guangxi Zhuang Autonomous Region, as of 2004, as a concrete move toward the establishment of the FTA and for promoting cooperation between business sectors of the two sides. The proposal, much welcomed by leaders of other countries, was later written into the Chairman's Statement released after the meeting.
       
           The CAEXPO, to be under the auspices of China's Ministry of Commerce and competent economic and trade departments of ASEAN members, will be hosted by the People's Government of the Guangxi Zhuang Autonomous Region in Nanning on November 3-7 each year. The expo, as an international and inclusive event, will bring together commodity and service trades, investment cooperation, cultural exchange and specialized forums. It will demonstrate the results of economic development of China and ASEAN, provide an opportunity and revenue for trade, investment and economic cooperation, and serve as an exchange platform for dialogs among governments, enterprises and academic circles. Centering on the Framework Agreement on Comprehensive Economic Cooperation Between China and ASEAN and based on the basic principle of mutual benefit and win for all, the expo will be geared to the progress of the FTA, the advancement of Sino-ASEAN mutual complement, and economic and trade cooperation between China and ASEAN in a comprehensive, thorough-going and pragmatic way. Guangxi, as a border region, enjoys a unique geographic advantage of connecting China with ASEAN and is conveniently accessible to sea and river transport. The region also enjoys social stability, ethic unity and a vibrant economy. The government and people of Guangxi have made full preparations for the expo. We believe the expo will provide more business opportunities for both sides.
       
           Guided by the diplomatic policy of "being an amicable neighbor and companion" in handling relations with its neighboring countries, China will continue to consolidate and deepen the harmonious and mutually trustworthy neighborly partnership with ASEAN, and strive to maintain harmony, peace and prosperity on both sides of the border. While the prosperity of ASEAN will help boost China's development, China's fast development will benefit ASEAN's economy as well. China and ASEAN members are highly complementary in resources mix, industrial structure and industrial and agricultural products, which provides each side with a huge potential for carrying out comprehensive and in-depth cooperation. Taking the opportunity of building the FTA and setting the CAEXPO as a platform, China will strengthen all-round cooperation with ASEAN members and make further endeavors toward common economic prosperity and social progress.





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