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Chinese Economy, 'Three-hitched Chariot' to Drive it onto Freeway
The Chinese economic train, driven by a "three-hitched chariot" of investment, domestic demand and foreign trade has by now recovered for a quicker increase, putting an end to the decreasing tendency as witnessed in the fourth quarter of last year. According to the estimation, the rate of the GDP increase in the first half of this year will come up to 7.5 percent with the annual rate of increase wavering somewhere between 7 to 8 percent.

Along with the speed-up of progress in planning and allotment of T-bond funds since the beginning of the year the fixed-assets investment that contributed some 60 percent to the economic increase last year has now witnessed an increase from month to month. The investment in the previous four months has reached RMB 541.6 billion-yuan, a growth of 27.1 percent as against the same period of last year.

On the basis of the statistic data already accepted by the World Bank and other international financial bodies the investment in fixed assets will see an increase of 23.4 percent in the first half of this year according to the forecast of the State Information Center.

In the meanwhile the accumulated value of import and export in foreign trade reached US$ 221.55 billion in the last five months, a rise of 12.1 percent as compared to that of last year, in which the export increased 13.2 percent. The retail value of commodities reached a total of RMB 1628.96 billion-yuan, an increase of around 8.5 percent.

Same as foretold by the State Information Center, the first half of this year will see the above two increase respectively by 11.6 and 8.4 percent.

Today, no matter what the outside world are saying about the Chinese economy and whether it's good and bad China has beyond doubt in its possession the resources incomparable by other countries in the world, namely a large domestic market of 1.3 billion people. The large population is at once a hindrance to the economic reform and development in China and a potential for a further advancement in economy. The strongest motive force in Chinese economy lies in none other than the inestimable domestic market.

The Chinese economy is now right in the course of transition, a transition from being pulled along by foreign trade to that spurred on by domestic needs. The period of the structure transition needs about 5 to 10 years. The increase last year had already indicated the importance of domestic needs in the flourishing of Chinese economy. As Qiu Xiaohua, deputy director of the State Statistic Bureau holds, for the 7 percent increase in the GDP, more than 90 percent of the driving force are generated from the domestic needs.

To expand and cultivate the domestic demands, intensify the capital construction and to bring about a growth in the fixed-assets investment this year will see China issue long-term treasury bonds of RMB 150 billion-yuan. They are mainly used in the T-bond construction projects, projects for the development in the west, technical transformation of major enterprises and the infrastructure construction for water-diversion projects from the south to the north of China.

The China that has entered into the World Economic Organization is experiencing a daily enhancement of acceptance by the outside world. The first five months of this year witnessed the setup of 11,612 foreign-invested enterprises that were newly approved by China, an increase of 23.26 percent as against the same period of last year with the actual use of foreign capital coming to US$ 16.922 billion, a rise of 12.38 percent.

In addition, along with the economic development a new round of consumption represented by housing, automobile and products of communication are in the shaping in China and will come to play a role. A big deposit of RMB 8,000 billion-yuan, hundreds of millions of cheap workforce and more acceptance and recognition by the outside world after China's entry into the WTO, all this can serve as a pivot for Chinese economy to enhance its competitiveness, expand itself in scope and scale. The view that deemed the perspective of Chinese economy as "dim and pale" is none other than biased if not a misunderstanding.

Of course, in the forward marching of the Chinese economy the shortage of employment, regional differences and widening gap of income, sluggishness in farmers' income increase and market confusion have all restricted the further advancement of Chinese economy. Therefore, we can't be overjoyed about the Chinese economy. However, should the problems be solved they will become strong motive forces in pushing the Chinese economy forward.

As many economic experts hold, the road ahead of us is by no means even and leveled. Nevertheless, the Chinese economic train can still maintain a higher speed in the running. The increase of the GDP is still on an "accelerating" stage in which an increase rate of around "seven or eight percent" will last a long time to come.

(People's Daily June 17, 2002)

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