|NO.24 (December 12, 2004)|
A routine meeting of the State Council in late October 2004, presided over by Chinese Premier Wen Jiabao, analyzed the economic situation in the first three quarters of this year, and arranged the work for the fourth quarter.
The meeting held that, judging from the economic operations in the first three quarters of the year, China's economy is developing toward the goal of macro-control set by the Chinese Government: The economy has developed swiftly and steadily, and economic returns have risen. A bumper harvest has become a foregone conclusion, and the grain output is expected to exceed the set goal. The momentum of overgrowth of investment in fixed assets has slowed down. Foreign trade has continued to increase considerably and the foreign funds utilized have kept growing. A good situation is seen in the country's income and expenditure, and the financial performance has been stable as a whole. Various reforms are fully underway. Employment and reemployment have been expanding constantly. Incomes, particularly those of farmers, have been increasing noticeably. The development of various social undertakings has been accelerating, and the country enjoys social stability.
But we should be clearly aware that there are still many contradictions and problems in current economic life, the meeting stressed. The prominent ones include the unstable foundation of agriculture, continued heated investment in fixed assets, and the heavy pressure of price hikes. The meeting called on the people to keep alert in the fourth quarter, make efforts to consolidate the achievements made in the first three quarters, and fulfill this year's goal, so as to lay a solid foundation for next year's work. To achieve this goal, it is necessary to continue to carry out the macro-control measures, take comprehensive measures, particularly in the fields of the economy and law, and give full play to the market mechanism.
The meeting deployed the work as follow:
First, to succeed in the work of agriculture, farmers and countryside. Efforts should be made to purchase autumn grain to ensure the growth of grain production will increase farmers' income. Farming in autumn and winter should be done well and the farming areas should be extended. In the meantime, efforts should be made to intensify the farmland construction in the winter.
Second, to control the investment in fixed assets. It is necessary to intensify guidance, control and supervision of new projects. To prevent a rush in the operation of numerous new projects, new policies concerning industry and market access should be adopted. Following the State Council's decision to deepen the reform of farmland management, we must intensify the management of farmland by law. Efforts should be made to control the overall supply and demand of currency credit, to adjust credit structure and to optimize credit management system.
Third, to coordinate the work of coal and power, as well as railway transport to guarantee the supply of production and life in the winter.
Fourth, to increase revenues, cut expenditures and intensify the levy of taxes according to law. We must prevent extravagance and waste, particularly the excessive spending at the end of the year.
Fifth, to intensify market supervision and management. Efforts should be made to keep prices stable and to seriously deal with various illegal activities concerning price.
Sixth, in the end of the year, we must give special concern to urban and rural residents who have economic difficulties, continue making headway in employment and reemployment, as well as social security.
Seventh, we must guarantee safety in production to prevent huge accidents and to ensure the security of people's lives. Efforts should be made to properly solve various social contradictions to maintain the social stability in earnest.
China witnessed a steadily and fairly rapid growth in its national economy in the first three quarters of this year, with GDP reaching 9,314.4 billion yuan, up 9.5 percent year on year. The growth rate is 0.6 percentage points higher than that of last year's same period, said Zheng Jingping, spokesperson of the National Bureau of Statistics, at a press conference not long ago sponsored by the Information Office of the State Council.
In this connection, the added value of primary industry was 1,256.1 billion yuan; that of secondary industry was 5,163.1 billion yuan; and that of tertiary industry was 2,895.3 billion yuan, up 5.5 percent, 10.9 percent and 8.5 percent, respectively.
Zheng said that in the first three quarters of this year unstable and unhealthy factors in economic life were put under control, and weak links were strengthened, thanks to the implementation of the government's macro-control policies. As a result, the country avoided economic ups and downs, and main-rained a fairly stable and rapidly pace of economic development during this period.
Favorable Turn in Grain Production
Zheng revealed that the output of summer grain this year rose by 4.8 percent, and that of early rice rose by 8.8 percent to reach 32.1 billion kg. A good harvest of autumn crops is also in sight, said Zheng. Therefore, the total grain production this year will increase by a big margin to achieve the goal set at the beginning of this year.
Profits of Industrial Enterprises Rise Considerably
In the first three quarters of this year, China's state-level industrial businesses generated an added value of 3,877.5 billion yuan and profits of 808.8 billion yuan, rises of 17 percent and 39.8 percent, respectively, when compared with the same period last year. The marketing rate of their products reached 97.8 percent, an increase of 0.2 percentage points over the same period last year.
Fixed Assets Investment Growth Slows
In the first three quarters of this year, the investment in fixed assets was 4,510.2 billion yuan, up 27.7 percent when compared with the figure for last year. But the growth rate fell 15.3 and 0.9 percentage points, respectively, when compared with that of the first quarter and the first half of this year.
Consumer Prices Increase
In the first three quarters of this year, consumer prices rose by 4.1 percent, with those of food increasing by 10.9 percent. In this connection, the price of grain went up 28.4 percent. The price of accommodation increased by 4.4 percent, and those of clothing, articles for daily use, services, medical treatment and health care, communications and transportation fell slightly.
Zheng said the rising consumer price trend was over. In September, consumer prices went up 5.2 percent, 0.1 percentage point lower than the figure for August.
According to a recent survey concerning the confidence of foreign investors, China and India have become the most attractive countries for overseas investment. CEOs worldwide are now facing the best commercial opportunities since 2000. But due to a range of new risks which have cropped up in investment operations, it is still uncertain whether foreign investment growth will come about.
The survey was made by the A.T. Kearney Management Consulting among the CEOs of the 1,000 largest consortiums in the world.
The CEOs surveyed all said that they regard China as the best country for foreign investment in the coming three years. And about 40 percent of them said that they have more confidence in China than they did last year. Only 10 percent are cautious about the investment situation in China. Believing that the returns on investment exceed the risk, many CEOs have not changed their investment strategy, in spite of China's current overheated economy, which is seen as the third-largest factor affecting investment.
Since 1998, CEOs have shown unprecedented zest for investing in China and India. China has led all other countries in attracting foreign investment, followed by the United States and India, respectively. India was formerly in the sixth place. Investors see China as a world-advanced manufacturer and ever-growing market for consumer goods. China excels India in market capacity, export convenience, preferential policies, mix of production cost, infrastructure facilities and overall economic situation, according to the survey.
The survey also shows that some 69 percent of the CEOs are optimistic about the global economic situation, a record high since 2000. Only 10 percent surveyed are pessimistic. Some 51 percent regard the fluctuation of currency exchange and interest rates as the most risky factors for investment, while this figure last year was 63 percent. Some 46 percent of global investors saw unstable politics and economies as big risks for investment, but the rate in last year was 62 percent.
A program to provide skill training for surplus rural workers to divert them from agriculture to other ways of making a living has achieved initial success. The program, named the "Sunshine Project," was jointly launched by the ministries of agriculture, finance, science and technology and construction. So far, more than 1.5 million surplus workers in rural areas have been trained under the program, 1.2 million of whom -- or 80 percent -- have already found a job.
According to the head of the Science and Education Department of the Ministry of Agriculture, this year the Central Government earmarked 250 million yuan and various provincial governments appropriated a total of 300 million yuan for this purpose. With these funds, six government departments implemented a training program in 1,393 counties, cities and districts in 28 provinces and autonomous regions, including Shanxi, Sichuan, Chongqing, Henan, Xinjiang and Heilongjiang. Every trainee received 100 yuan as a living allowance.
Currently, China still has 150 million surplus rural workers, and 6 million more are added every year. Among this total, those with middle-school education or lower account for 87.8 percent, and those with college education make up only 0.52 percent. Those who have undergone some type of technological training account for 9.1 percent. The head of the Science and Education Department noted that improving the skills of surplus rural workers is the key to increasing their incomes and diverting them into non-agricultural sector.
Heilongjiang Province has trained 100,000 surplus rural workers in addition to the designated quota set by Sunshine Project, at a cost to the province of an extra 20 million yuan. Meanwhile, many provinces and autonomous regions have extended skill training through radio, TV, newspapers, magazines and the Internet, together with knowledge of rights protection, law, and life and employment in cities for rural workers.
As learned fi'om the National Agricultural Taxation Working Meeting held in Beijing recently, pilot reform of agricultural taxes and fees, which consists mainly of eliminating non-tax charges (such as those for accumulation fund, public welfare fund, administrative fees at village level, the nine-year compulsory education, family planning, special care undertaking, militia training and village road construction) and reforming agricultural taxation has made remarkable achievements since it was unfolded nationwide in 2003. Financial burden on farmers has been reduced more than 30 percent nationwide totaling about 28 billion yuan.
According to an official at the State Administration of Taxation, four provinces and cities including Jilin, Heilongjiang, Beijing and Tianjin have exempted agricultural taxes; Shanghai has exempted agricultural taxes on farmers and Zhejiang and Fujian have exempted agricultural taxes on grain and oil crops on taxable land areas. In addition, 268 counties in another 16 provinces have exempted agricultural taxes--double the 134 counties in six provinces as estimated by the Ministry of Finance early this year. Through agricultural tax elimination and tax rate reduction, China has reduced agricultural tax by about 22 billion yuan. Plus the elimination of taxes on special agricultural products except tobacco leaves totally about 28 billion yuan has been reduced from the farmers. Through pilot reform financial burden on farmers has been reduced by more than 30 percent nationwide. Distribution order in rural areas has been improved considerably. Vicious incidents and cases related to farmer burden have been drastically reduced and relationship between cadres and masses has been improved.
The official said by the end of 2003 agricultural tax-collecting departments at various levels have fulfilled reduction or ex-emption of 15.1 billion yuan for disasters or crop failures, reduction or exemption of 5.092 billion yuan for society and of 267 million yuan for major grain-growing families. A total of 614 million people have benefited from this so far. Meanwhile the administration of the tax on occupation of cultivated land and property transfer tax have also made huge progress. In 2003 revenue from the two taxes reached 45.18 billion yuan in China, of which property transfer tax accounted for 35.943 billion yuan and the tax on occupation of cultivated land 9.237 billion yuan, increasing by 239 percent and 163 percent respectively from those in 1999. All these have greatly alleviated the pressure on finance resulting from reform and burden reduction, ensured the normal operation of grass-root governments and made another important contribution to the reform.
I. Social Security Coverage Expanded
The coverage of China's social insurance in all fields continues expanding in the first three quarters of this year. The number of people participating in old-age insurance, medical insurance and unemployment insurance exceeded 100 million. More people have enjoyed the benefit brought by the social insurance.
By the end of September, the number of people participated in the basic old-age insurance had reached 160.62 million, an increase of 5.56 million over the end of last year. Some 119.41 million people had participated in medical insurance, a rise of 10.39 million over the end of last year. The number of those participated in unemployment insurance, maternity insurance and the insurance for work-related injuries constituted 103.67 million, 40.92 million and 58.83 million, respectively. At the same time, the basic old-age pension of enterprise retirees across the country was paid on time and in full. Some 4.36 million people nationwide received the unemployment insurance fund, 270,000 people enjoyed maternity insurance treatment and 370,000 people enjoyed the treatment of work-related injury insurance.
According to the Ministry of Labor and Social Security, department concerned will continue to do the work better to expand the coverage of various social securities, focusing on the employees of non-public economies and organizations and those who are employed in a flexible manner, so as to enable more laborers to enjoy social security when they are unemployed. Labor and social security departments will show greater concern to the old industrial bases that have difficulties in paying unemployment insurance funds, guide them to work well in the issuance of unemployment insurance funds to qualified unemployed workers on time and in full. Efforts will be made to enhance the control over unemployment, guide all localities to steadily propel state-owned enterprises' bankruptcy and restructuring work, focus on workers' assignment work, adopt measures to support large and medium-sized state-owned enterprises to relocate surplus workers through restructuring. The ministry will make in-depth studies on effective measures concerning the use of unemployment insurance funds and to enhance reemployment rate.
II. Old-age Pension Increased
According to the Ministry of Labor and Social Security, the work to adjust the basic old-age pension for enterprise retirees started not long ago. It stipulates that the basic old-age pensions started to be raised on July 1, 2004 for the enterprise retirees who had conducted retirement procedures prior to December 31, 2003 in accordance with regulations.
It is reported that the adjustment is made based on a certain proportion of the previous year's average wage growth rate of local enterprises workers, and will appropriately tilt to those who retired early with low old-age pensions. The central financial department will allocate special funds to properly subsidize the central and western regions, old industrial bases and Xinjiang Production and Construction Corps that really have financial difficulties. The Ministry of Labor and Social Security requires all localities to accelerate the implementation of the work and to ensure the adjustment.
The Central Government also makes clear the allowance for the agricultural reclamation cnterprises that participated in the insurance, for they have heavy burdens and difficulties in collecting funds.
III. Lower Unemployment Rate
China's employment and reemployment work goes steadily. At the end of the third quarter, the registered urban unemployment rate stood at 4.2 percent, or 8.21 million, 0.1 percentage point lower than the 2003 year-end figure. The country created new jobs for 7.74 million people in urban areas, completing 86 percent of the national annual goal of 9 million. Some 3.85 million laid-off workers who received preferential certificate for reemployment found jobs, and 790,000 of them are female workers in their 40s and male ones in their 50s.
An official of the Ministry of Labor and Social Security attributed the achievements to the three aspects: First, the policies to promote employment and reemployment have been well carried out. Second, reemployment training, start-up training and skill straining for laid-off workers have been promoted. Third, employment work for graduate students and farmer workers has been enhanced.
China's foreign trade figures turned from a deficit to a surplus in September this year. According to the Statistics from the customs, China's combined import and export values in the first nine months of this year reached US$828.55 billion, up 36.7 percent year on year and approaching last year's total. Of this, exports were worth US$416.24 billion, and imports US$412.31 billion, up 35.3 percent and 38.2 percent, respectively. The total surplus was US$3.93 billion.
It is worth noting that in September alone the volume of imports and exports registered a record high of USS 106.61 billion, equivalent to the total for 1988 and representing a rise of 27.6 percent year on year. Of this total, exports were worth US$55.8 billion, and imports US$50.81 billion, increases of 33.1 percent and 22.1 percent, respectively.
The customs statistics showed that in the first nine months of this year the total value of imports and exports registered US$358.64 billion, a rise of 33.8 percent. Of this, imports rose by 34.3 percent to reach USS186.08 billion. During this period, foreign trade involving the processing industry was worth US$387.92 billion, up 36.9 percent. Of this, exports made up US$228.82 billion, up 35.9 percent, and imports US$159.1 billion, up 38.5 percent.
By the end of September this year, the European Union was still China's largest trade partner, with bilateral trade amounting to US$128.02 billion, an increase of 35.6 percent. The United States came second, with bilateral trade totaling US$122.23 billion, up 34.4 percent. Japan was third, with its trade with China reaching US$121.78 billion, up 26.9 percent. Other major trading partners of China were Canada, Australia and the Republic of Korea, with increases of 56.2 percent, 50.3 percent and 46.7 percent, respectively.
The statistics show a rapid trade growth in machinery and electronic products, and bulk commodities. The export of machinery and electronic products was worth US$225.01 billion, up 44 percent over the same period of last year and 8.7 percentage points higher than the growth of the country's total exports in the same period, as well as 3.2 percentage points higher than the export figure for the same period of last year. In the same period, China's exports of new and high-tech products reached US$ 112.95 billion-worth, exceeding the total last year, an increase of 54.3 percent year on year and accounting for 27. 1 percent of the country's total. Import and export transactions in September alone reached a record high of US$31.41 billion, exceeding the US$30 billion for the first time in a single month. From January to September, the export of new and high-tech products increased rapidly, up 19 percentage points when compared with the growth of the country's total exports in the same period.
The growth of imports of primary products slowed slightly, and the growth of bean and steel imports dropped by a large margin. In the first nine months, China imported primary products worth US$85.36 billion, representing an increase of 59.4 percent year on year.
According to the latest statistics from the General Administration of Customs, China has witnessed a favorable trade balance for five months running since May. In the first three quarters of this year, China achieved a favorable trade balance of US$3.93 billion, turning the total foreign trade from deficit to surplus.
In the first three months of this year, however, China saw a trade deficit of US$8.43 billion, the biggest for many years. In April, the deficit continued.
With the initial achievements of the Central Government's macro-control policy, the export growth of primary products slowed markedly. In May, China saw the first favorable trade balance after four months of deficit. The accumulated deficit shrank from US$10.76 billion at the end of April to US$8.66 billion at the end of May, and continued to drop to US$6.9 l billion in June, to US$4.87 billion in July and to USS1.06 billion in August.
Judging by the situation in the first three quarters of this year, experts in economics and trade predicted that China's foreign trade may top USS 1 trillion-worth, and that a roughly balance with a slight surplus can be achieved.
China had ranked first in the world in terms of total telephone users, while the number of Internet users ranked second by the end of October 2004. The manufacture scales of electronic information products and the technology of communication network had been at the top level in the world. Major progress had been made in independent research and development of information communication technologies. China's information communication industry has occupied an important position in the world.
At the opening ceremony of the 2004 China International Communication Equipment and Technology Exhibition held not long ago, Vice Ministry Xi Guohua of the Chinese Ministry of Information Industry disclosed that in recent years the annual growth of new telephone subscribers stood at over 90 million annually, and the total number of telephone users exceeded 600 million. Internet has been developing rapidly, with the number of users exceeding 90 million, nearly 20 million of whom have accessed to broadband.
Manufacture industry of electronic information products has been developing in a good momentum. In the first nine months of this year, its sales revenue reached 1.88 trillion yuan, equivalent to the whole year's level in 2003, and its industry scale ranked first in the world.
In regard to the next-step development, Vice Premier Xi Guohua disclosed that the Ministry of Information Industry would proceed from China's actual national conditions, closely follow the development trend of world information communication technology, enhance the development and application of new technologies based on the principle of combining the government guidance with the enterprises promotion, so as to enable the vast majority of people to get more and more benefits from the technological progress and the industry development.
The Chinese Ministry of Information Industry and China Council for the Promotion of International Trade (CCPIT) sponsored the exhibition. China Post Telecommunications Equipment Group Corp. and the China International Exhibition Center Group Corp. served as the responsible organizations. More than 600 enterprises from 23 countries and regions displayed their advanced technologies and products including 3G, NGN and soil exchange, broadband access and other hi-tech products.
Through more than 10 years of efforts, the exhibition has grown into an arena for famous Chinese and world information and telecommunication enterprises to display their advanced technologies and equipment, playing a positive role in consolidating and enhancing the exchanges and cooperation among Chinese and foreign information communication industry and in promoting the development of the industry in China.
The Chinese Government supports and encourages the scientific progress and industrialized development in its aviation and aerospace undertaking, and the industry's reform and renovation for a rapid development based on domestic and overseas market demand, said Zhang Yunchuan, Minister of the Commission of Science, Technology and Industry for National Defense, at the Summit Forum on China International Aviation and Aerospace held not long ago in Zhuhai, Guangdong Province.
China will continues to implement its development planning starting with feeder liners, and strives to propel the feeder liners' development itl accordance with international standard and market operation mode. Efforts will be made to accelerate the industrialization of general planes and light helicopters for civilian use and speed up the development of new types and new technologies.
In tile field of aerospace, China is actively promoting its satellite application from "experiment" to "service," so as to form a satellite application series including weather satellite, resource satellite, marine satellite and small satellite groups for monitoring environment and disasters. The country will set up a satellite ground observation system with long and steady operation, manufacture a new generation of communications and broadcasting satellite, video-audio live satellite and of nonpoisonous, environmentally friendly and highly reliable rocket carriers with powerful thrust, aimed at comprehensively upgrading the overall level and capability of China's rocket carrier. China will continue to develop space science, conduct hyperspace exploration and support the efforts to establish satellite exploration series and space environment security system. China will, based on its plan, accomplish its moon probe project, and at the same time, conduct the confirmation of the second- and third-phase noon probe project and actively propel the follow-up work for manned aviation.
China has scored eye-catching achievements in its aviation and aerospace undertaking over the past 55 years since the founding of the People's Republic of China. It has been reported that the country's aerospace industry has produced more than 10,000 planes in several dozens of types and exported hundreds of planes and many coordinated engines, equipment and production lines. New progress has been made in the research, development and manufacture of feeder liners, general-purpose planes, helicopters and aerospace engines. China's aviation industry bas successfully developed and manufactured various kinds of application satellites including scientific experimental satellite, weather satellite, resource and communications satellites. It has successfully manufactured 12 types of rocket carriers in Long March series and carried out 81 times of launches, sending 61 Chinese satellites and five spacecrafts, as well as 30 foreign satellites to the sky.