National Economy Kept Steady and Fast Growth in the First Quarter of 2007

In the first quarter of 2007, the national economy kept steady and fast growth. According to preliminary estimation, the gross domestic product (GDP) of China in the first quarter of this year was 5,028.7 billion yuan, a year-on-year increase of 11.1 percent, which was 0.7 percentage points higher. Of this total, the value added of the primary industry was 363.1 billion yuan, up by 4.4 percent; the value added of the secondary industry was 2,555.2 billion yuan, up by 13.2 percent; and the value added of the tertiary industry was 2,110.4 billion yuan, up by 9.9 percent.

1. Agricultural production was steady with increased acreage of grain crops. According to the sample survey of farmers’ intention on farm crops plantation, the expected planting area for grain would reach 106.10 million hectares, a year-on-year increase of 0.5 percent, representing consecutive four years of increase. Of this total, the planting area for summer grain was 26.60 million hectares, 6.05 million hectares for early rice and 73.45 million hectares for autumn crops. At present, the growth of crop seedlings in major summer grain areas was good, the proportion of first grade seedlings accounted for 47.4 percent of the total, which was 2.3 percentage points higher than that by last winter.

2. Industrial production speeded up with further improved efficiency. In the first quarter of this year, the total value added of the industrial enterprises above designated size was up 18.3 percent year-on-year (growth in March was 17.6 percent), or 1.6 percentage points higher than that in the first quarter of 2006，or 1.7 percentage points higher than that in the entire year. Of this total, the year-on-year growth of heavy industry was 19.6 percent or 2 percentage points higher. The growth of the light industry was 15.6 percent, or 0.9 percentage points higher. If grouped by products, power generation and the production of coal were up by 15.5 percent and 14.8 percent respectively; the production of raw materials such as rolled steel, alumina, aluminum, aluminum products, ferroalloy and ten kinds of non-ferrous metals rose by 26.2 percent, 53.7 percent, 43.0 percent, 44.4 percent and 30.8 percent respectively; the production of electronic and telecommunication products such as microcomputers and mobile phones rose by 26.1 percent, and 35.3 percent; and the production of motor vehicles went up by 22.3 percent, of this total, that of cars went up by 32.1 percent.

Profits made by industrial enterprises increased by a large margin. In the first two months of this year, the profits made by industrial enterprises above designated size stood at 293.2 billion yuan, a year-on-year increase of 43.8 percent, or 22 percentage points higher than that in the same period last year. Among the 39 industrial divisions, 35 divisions registered year-on-year growth with profits. The top five divisions in newly increased profits were steel, electric power, chemical industry, manufacturing of transportation equipment and petroleum processing and coking, which accounted for 68.4 percent of the national total of increased profits. In the first quarter, the sales ratio of industrial enterprises above designated size was 97.1 percent, down by 0.7 percentage points as compared with that in the first quarter of the previous year.

3. The growth rate of investment in fixed assets dropped from high level and the investment in central and western areas increased rapidly. In the first quarter of this year, the investment in fixed assets of the country was 1,752.6 billion yuan, up by

23.7 percent, or a drop of 4 percentage points as compared with the growth in the same period last year. Of this total, the investment in urban areas reached 1,454.4 billion yuan, up by 25.3 percent (It was up by 26.8 percent in March), a drop of 4.5 percentage points; that in rural areas was 298.2 billion yuan, up by 16.7 percent. Of the total investment in urban areas, the investment the primary industry was up by 20.3 percent, that in the secondary industry went up by 27.0 percent and 24.0 percent in the tertiary industry. In the first quarter of this year, the investment in real estate development was 354.4 billion yuan, up by 26.9 percent, or 6.7 percentage points higher than that in the same period of last year. The completed investment in residential buildings reached 246.2 billion yuan, a year-on-year growth of 30.4 percent, or 7.3 percentage points higher. Of this total, the completed investment in economy housing was 8.8 billion yuan, up by 41.6 percent, accounting for 2.5 percent of the total investment in real estate development. In the first quarter of this year, the year-on-year growth of urban investment in fixed assets by eastern, central and western areas grew by 21.4 percent, 35.8 percent and 26.8 percent respectively. The proportion of investment in central and western areas out of the national total rose by 1.6 and 0.2 percentage points over that in the same period last year.

4. Sales on domestic markets accelerated and market prices went up. In the first quarter, the total retail sales of consumer goods reached 2,118.8 billion yuan, a year-on-year rise of 14.9 percent (up by 15.3 percent in March). Of the total, the retail sales in urban areas reached 1,433.3 billion yuan, up by 15.5 percent, the retail sales at and below county level stood at 685.5 billion yuan, up by 13.7 percent. In terms of different sectors, the sales by wholesale and retail business was 1,784.2 billion yuan, up by 14.7 percent and that by lodging and catering industry was 298.4 billion yuan, up by 17.4 percent.

In the first quarter of this year, the consumer price index went up by 2.7 percent 3.3 percent growth in March), 1.5 percentage points higher than that in the same period last year. Of this, the price rose by 2.5 percent in cities and 3.1 percent in rural areas. In terms of commodity categories, prices for food rose by 6.2 percent, prices for housing were up by 3.8 percent, prices for recreation, education and culture articles and related services went down by 1.4 percent. Prices for other categories of commodities either maintained the same level or had slight rise. The retail prices of commodities rose by 2.1 percent year on year in the first quarter (a 2.5 percent growth in March). The producer’s prices for manufactured goods rose by 2.9 percent (2.7 percent growth in March). The purchaser’s prices for raw material, fuel and power rose by 4.1 percent (by 3.7 percent in March).

5. Exports kept fast growth, and the utilization of foreign direct investment accelerated. The total value of imports and exports for the first quarter was US$ 457.7 billion, up 23.3 percent year-on-year. Of the total, the value of exports was US$ 252.1 billion, up by 27.8 percent, and the value of imports was US$ 205.7 billion, up 18.2 percent. The trade surplus was US$ 46.4 billion, up by US$ 23.1 billion. The total value of foreign capital actually utilized was US$ 15.9 billion, up by 11.6 percent. At the end of March, China registered a total of US$ 1,202.0 billion in foreign exchange reserves, an increase of US$ 135.7 billion over the end of 2006.

6. Urban and rural residents’ income increased by a large margin, and the growth rate of rural residents’ income made a record growth in ten years. In the first quarter, the per capita disposable income of urban residents was 3,935 yuan, a year-on-year growth of 19.5 percent, or a real growth of 16.6 percent year-on-year, or 5.8 percentage points higher than that in the same period last year. The per capita cash income of rural residents was 1,260 yuan, an increase of 166 yuan, up by 15.2 percent year-on-year, or 12.1 percent in real terms, an increase of 0.6 percentage point, the highest since 1997.

7. Money supply grew fast and the excessive liquidity was still outstanding. By the end of March, the broad money (M2) was 36,410.5 billion yuan, a year-on-year growth of 17.3 percent, which was 1.5 percentage points lower. The narrow money (M1) was 12,788.1 billion yuan, a rise of 19.8 percent, or 7.1 percentage points higher. The cash in circulation (M0) was 2,738.8 billion yuan, up by 16.7 percent, or 6.2 percentage points higher. At the end of March, outstanding deposits of all financial institutions stood at 35,424.8 billion yuan, an increase of 1,875.5 billion yuan as compared with that at the beginning of this year. Outstanding loans of all financial institutions reached 23,958.6 billion yuan, an increase of 1,421.7 billion yuan over that at the beginning of this year.

Outstanding problems existing in the economic development are: imbalanced balance of payments, excessive liquidity, irrational economic structure and high pressure on energy conservation and pollutant emission reduction. We will adhere to the scientific approach to development, carefully implement various policies set by the central government, continue to strengthen and improve macro-control, actively push forward the reform opening up, speed up structural adjustment and change the pattern of economic growth, lay emphasis on the life of the population, strive for a harmonious society, and realize a sound and rapid growth of the national economy.