China's efforts to rein economy pay off

Byzjx

Updated 2004-10-25

After one year's macro control, China's economic boom has showed modest slowdown with the growth rate being 9.5 percent in first three quarters.

"The government's efforts to cool the economy has begun to pay off," said Xie Fuzhan, deputy director of the Development and Research Center of the State Council.

China has brought its economy from breakneck growth to stable development, said the expert of macroeconomics.

Preliminary figures released by the National Bureau of Statistics (NBS) indicates that China's GDP (gross domestic product) growth rate reached 9.5 percent in the first three quarters, down 0.3 percentage points compared with the first quarter.

The increase of investment in the fixed assets from January to September also reported a drop 15.3 percentage points and 0.9 percentage points from the first half of the year and first quarter respectively.

The figures were encouraging and freed people who worries about hard landing, said Min Tang, chief economist of ADB (Asian Development Bank) Resident Mission in China.

Overheated industries such as steel, electrolytic aluminum, cement and real estate have been reined under the macro-control policies, while foreign trade maintained good momentum and sound increase, said Tang.

China's imports and exports have an effect on the economic development of its neighbors and the world. If China's foreign trade experienced ups and downs greatly, the world economy would be affected.

"As China has made a preliminary success with its macro-controlpolicy, its neighbors and those who have close economic ties with the country could feel at ease now," said Tang.

Experts are optimistic about China's grain output this year. Statistics with the NBS shows that following the 4.8 percent growthof summer grain, the output of early rice reached 32.1 billion kilograms, up 8.8 percent. Good harvest of autumn crops is in sight, said Zheng.

    Xie predicted China's total output of grain this year would exceed 455 million ton, the goal set by the central government at the beginning of the year.

In the first three quarters, the average income of farmers per capita also rose to 2,110 yuan (254 US dollars), a year-on-year increase of 11.4 percent.

The macro-control policy, which gave strong support to grain production, should bring agriculture back on track, Xie said.

China took macro control policy late last year when the economy became partly overheated. The problem worsened at the beginning of this year. In the first two months, fixed asset investment increased 53 percent from a year earlier to a ten-year high.

Excessively rapid increase in investment resulted in big rise in loans, higher prices of capital goods, heavy pressure of inflation and tight supply of coal, power, oil and transportation.

Therefore, the central government tightened control over loans and land provision as well as project certification in order to cool the economy.

A survey released by the NBS earlier this week showed 70 percent of the economists were satisfied with the present economicsituation. They predicted fixed assets investment would drop 27 percent for the whole year and 24 percent next year.

The economists predicted China's economic growth would slow down next year, but the GDP growth rate would remain higher than eight percent.

However, China's economy still has problems in many aspects such as the investment mechanism, said Zheng.

The slowing down economy might rebound if the macro control policy did not continue, said Xie.

He suggested the government should be vigilant against unstableand unsound factors, and make timely adjustments in the process.

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