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Expert: China can avoid galloping inflation
Updated: 2004-07-18 12:53

It is not proper to say that China's economy is overheated on the whole, the chief economist of the National Statistics Bureau said in Guangzhou Saturday.

Although there are signs of a generally overheated investment, consumption remains "cold" relatively; although "feverish" development has been witnessed in the secondary industry, the heat is far from high enough for the primary and tertiary industries, said Yao Jingyuan, who is also spokesman of the state statistics agency.

China's gross domestic product rose by 9.7 percent in the first half of this year compared with some people's prediction of 11 percent. This shows the government's macro-control policy has worked, said Yao at a symposium on China's enterprises' operation overseas held in Guangzhou, south China.

Industrial production did grow rapidly in the first quarter, but it slowed down month by month in the second quarter. Meanwhile, financial revenue, enterprises' profits and people's income all rose by a big margin in the first half year, said Yao.

He also ruled out the possibility of a galloping inflation in China, saying that the growth in the general price level remains in a controllable range and is tending to drop.

China witnessed an inflation in 1988 when the consumer price index grew by 18 percent, and another inflation hit the country in 1993 and 1994 when the index jumped by 24.1 percent. "The growth rate for the first half of this year is only 3.6 percent," he said.

Yao also supported his judgment by the big growth in the country's foreign trade and volume of foreign investment it had utilized.

According to statistics, foreign-invested enterprises in China had a contribution of 57.3 percent to the nation's foreign trade in the first half year, compared with 53.9 percent for last year. Some US$33.9 billion of foreign investment was used in the six months, up 12 percent from a year earlier.

"This shows that China is offering more opportunities for international capital to make profits and global entrepreneurs have a positive view on China's sound economic operation," Yao said.

He also pointed out the major problems that might affect the economic growth adversely if not handled properly. The problems include the excessive large scale of fixed assets investment, the shortages of coal, electricity, petroleum and means of transportation, and the sharp increase in the prices of raw materials.

Yao encouraged the local governments at all levels to make painstaking efforts to carry out the state's macro-control policy to the letter at this critical moment and guard against a rash ending.

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