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China: GDP growing 9.1% in 2003
( 2004-01-20 16:03) (Agencies)

China's economy continued growing at a blistering pace in 2003, expanding 9.1 percent from the previous year in its best performance since 1997, according to official figures.

The National Bureau of Statistics (NBS) said gross domestic product was 11.6694 trillion yuan (1.414 trillion dollars), up 9.1 percent.

Growth in 2002 was 8 percent.

Per capita gross domestic product came in at US$1,090, as the economy shrugged off the impact of Severe Acute Respiratory Syndrome, which forced the country to its knees in the second quarter.

GDP in the fourth quarter spiked 9.9 percent while economic growth in the first nine months was revised to 8.7 percent from 8.5 percent, due to late reporting of value-added output.

NBS head Li Deshui said the booming economy was underpinned by industrial output continuing at a heady clip, rising 17 percent over the year.

Fixed asset investment, a measure of government spending on infrastructure and other economic facilities, jumped 26.7 percent while retail sales grew 9.1 percent.

The consumer price index for 2003 came in at 1.2 percent.

The bureau added that per capita disposable incomes grew faster in urban areas than the countryside with urban incomes up 9.3 percent while rural incomes rose 4.3 percent.

Primary industry in 2003 grew 2.5 percent in 2003 to 1.72 trillion yuan while secondary industry jumped 12.5 percent to 6.18 trillion yuan. The tertiary service sector expanded 6.7 percent to 3.77 trillion yuan.

Economy Not Overheating

Meanwhile, Li Deshui, China's top statistician, denied that the country's economy is overheating, and abrupt changes to economic policy were unnecessary.

Li acknowledged that the seven-year-high growth since 1997 was driven mainly by surges in capital investment. However, the government successfully kept inflation at a "normal" level of 1.2 percent.

He went on to say that the country had fulfilled its policy goals of employment growth and balance of payments last year. These major indicators showed that the economy should not be considered to be overheating.

But he admitted that certain areas and certain industries did appear to be overheating.

China consumed 36 percent of the world's total steel supply, 30 percent of coal and 55 percent of cement last year, reflecting low efficiency compared with the developed nations. Shortages emerged in electric power, coal, petroleum and transport supply, forming new bottlenecks in the economy.

In order to cope with these problems, Li went on, the Chinese government had taken a series of measures to guide the economy in the direction of inclusive, coordinated and sustainable development.

This year and in the years ahead, China would seek rapid economic growth along with a balance between social and economic development, Li said. 

New Maths

China has overhauled the way it reports its GDP figures this year, bringing it in line with other major economies such as the United States, which revises its growth data twice after initial estimates are released.

Li said that as part of the changes China will limit GDP data to annual and quarterly announcements, rather than monthly.

Many independent economists believe China is under-reporting GDP, smoothing out the figures so as not to indicate big booms or busts.

Morgan Stanley, for example, forecast 4th quarter GDP at over 10 percent while UBS said in a research note that China grew at a "very overheated" 11.5 percent last year.

Andy Xie, chief economist of Asia Pacific at Morgan Stanley, said he believed yearly growth should be in double digits.

"The growth rate for last year was quite controversial, because many thought it was understated. And there was pressure on the government to revise upwards the numbers, that's why they revised up the third quarter figure," he said.

"I think the Chinese growth rate was probably in the double digits last year. Getting to 9.1 is sort of close. It is hard to say, China's economy is changing very rapidly."

Ma Jun, Deutsche Bank and former World Bank economist, welcomed the change in reporting methods, saying it showed China was becoming more transparent.

"That is a good sign that China is responding to market economists' concerns about how it calculates its figures. It is also a sign of greater government transparency," he said.

But he warned: "If the market does not quite understand the accounting change it could cause concern about overheating -- which triggers inflation."

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