GDP growth records 11-year low but on track
( 2003-07-18 07:06) (China Daily)
China's economy grew 6.7 per cent in the second quarter of this year compared with a year ago -- the lowest rate for the period since 1992, due to the outbreak of SARS.
But the country's gross domestic product still rose a year-on-year 8.2 per cent to 5 trillion yuan (US$602 billion) during the first half of this year.
The economy grew an annual 9.9 per cent in the first quarter of 2003 and 8 per cent for all of 2002.
The service industry only saw a growth of 0.8 per cent in the second quarter, a drop of 6.1 percentage points compared with that of the same period last year.
Retail sales rose 6.7 per cent in the quarter, far lower than the 9.2 per cent rate achieved in the first quarter.
Yao Jingyuan, chief economist of the National Bureau of Statistics, said in spite of SARS, China is capable of meeting the year's growth target of 7 per cent.
According to Yao, the relatively fast pace of economic development in the first half year was mainly because of rapid growth in fixed assets investment and exports.
Fixed assets investment grew a year-on-year 31.1 per cent during the first half of this year to 1.93 trillion yuan (US$232.5 billion). Foreign direct investment rose a year-on-year 34.3 per cent to US$30.3 billion.
Exports rose a year-on-year 34 per cent to US$190.3 billion.
But retail sales rose only 8 per cent to 2.2 trillion yuan (US$265 billion).
Fan Gang, director of the National Economic Research Institute, said the government should watch out for an overheating economy and possible inflation, resulting from the surge in fixed investment and exports.
"If the economy grows more than 10 per cent, it would become overheated and inflation would loom,'' Fan said. "If there had been no SARS outbreak, the country's economy would grow more than 10 per cent this year.''
During the first quarter of this year, the consumer price index, Chinese policy-makers' key inflation gauge, rose a year-on-year 0.6 per cent.
Zhang Liqun, a senior researcher with the State Council's Development Research Centre, said as market forces have begun to play a leading role in economic development, the Chinese economy will continue its upward trend in the 10th Five-Year Plan period (2001-05).
"No one can underestimate the solid foundation laid by the reform and opening-up process, the country's efforts to expand domestic demand, and the central government's role in controlling the overall economy,'' he said.
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