Unstable factors in economy under control
(Xinhua)
Updated: 2005-08-17 10:06

Thanks to macro-control policies by the government, China's economy has entered another round of steady growth, with unstable factors such as overheated investment, inflation threats and demand deficiency successfully curbed, economists said.

Zhang Liqun, an expert with the macro economy department of the Development and Research Center under the State Council, said that three factors, including the expanded consumption in housing and transportation, the increase of labor-intensive products exports, and the growth of a global new economy and new technology, are driving China's economic development.

Zhang held that these factors would first drive the development of downstream sectors like housing, automobiles, light textile, home appliances, electronic communication products, and digital products.

In the meantime, basic sectors like heavy chemical materials, raw materials, equipment, energy and transportation will be boosted indirectly as well, Zhang acknowledged.

From the perspective of demand, the driving forces for another round of economic growth are stable, he said.

Trade surplus rocketing is the most striking hallmarks in China's economic performance in the first half year, said Prof. Song Guoqing of the Beijing University.

The net exports, growing at an unexpected rate, are forcefully pushing forward the country's economy.

Figures from Chinese customs show that in the first half year, China's exports jumped 32.7 percent, while imports only grew 14 percent, with trade surplus totaling 39.6 billion US dollars. During the same period last year, the country's trade surplus was 6.8 billion US dollars.

Song expressed anxiety about China's heavy reliance on exports. It is very hard to keep the rapid growth of exports for long, so it is of great importance for the economy to reduce dependence on foreign trade and expand domestic demand, he said.

Bolstered by the growth of employment and income, China's domestic consumption is expected to expand stably, said Zhang.

In the first half of this year, the total retail sales of consumer goods actually grew 12.0 percent, 1.8 percentage points higher than the same period of 2004, according to the National Bureau of Statistics.

"China's high rate of bank savings, investment, robust market demand and abundant labor forces guarantee the rapid growth of the Chinese economy," said Zheng Jingping, spokesman of the National Bureau of Statistics.

The hyperactive growth of fixed asset investment has been effectively controlled. In the first half of this year, China's urban fixed asset investment grew 27.1 percent, down 3.9 percentage points from the same period last year.

So as to make China's economy grow stably in a longer period, the government should stabilize its macro-control policy and make full use of market tools in adjusting economic structure, Zhang suggested.

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