The business climate index measuring company performance was 118.0 points during the first quarter, rising 0.4 percentage points compared with the previous quarter but dropping 0.6 percentage points compared with the same period last year.

"The enterprises continued to develop in a healthy way, fuelled by the country's pro-active fiscal policy and sound monetary policy," said Lin Tao, an official with the bureau. "This is a piece of good news for the economy as this could help boost general economic growth."

Premier Zhu Rongji said last month that the country is aiming for 7 per cent economic growth this year.

Economists said the target is achievable because China has a sound and solid material basis for such growth.

"China has a large market, abundant human resources, high savings deposits and foreign exchange reserves, which are beneficial to the country's economic development," said Hu Shaowei, a senior economist with the State Information Centre.

"If the global economy begins to pick up this year, the Chinese economy will likely grow quarter by quarter."

China will also issue 150 billion yuan (US$18 billion) in treasury bonds for construction this year - the same level as 2001.

The direct beneficiaries of new infrastructure projects are companies involved in heavy industries, which can sell more goods such as steel and cement.

Fixed assets investment in China will play a decisive role in maintaining an economic growth target of 7 per cent this year, Hu added. "Fixed assets investment is expected to grow 11 per cent this year."

Domestic consumption - which mainly benefits companies involved in light industry such as manufacturers of air-conditioners and colour TVs - is expected to rise 10 per cent, said Niu Li, another senior economist with the centre.

The measures taken last year to raise the salaries of public servants, provide compensation for laid-off workers and to increase pensions will undoubtedly help improve people's income levels, stimulating domestic demand this year, he said.

"The country will continue to take measures to raise the income levels of its residents this year," he said. "These include the 'tax-for-fees' reform in the rural areas."

The country has also fostered a certain number of "hot areas" for consumption including the automobile and housing market recently, Niu said.

The country's extension of the week-long National Day and May Day holidays has also resulted in booming tourism and holiday spending.

(China Daily April 9, 2002)