Press conference on national economy in Q1 of 2006

At the press conference sponsored by the State Council Information Office on April 20, 2006, Zheng Jingping, spokesman of the National Bureau of Statistics of China, briefed the press on the national economy in the first quarter of 2006. He also answered questions from the press.

Full text:

Speech by Zheng Jingping, Spokesman of the National Bureau of Statistics

Good Start for National Economy in the First Quarter of 2006 National Bureau of Statistics of China

Zheng Jingping, Spokesman

National Bureau of Statistics of China

20 April 2006

In 2006, the national economy kept fast yet steady growth. According to preliminary estimation, the gross domestic product (GDP) of China in the first quarter of this year was 4,331.3 billion yuan, a year-on-year increase of 10.2 percent, which was slightly higher than last year's 9.9 percent growth. Of this total, the value-added of the primary industry was 320.0 billion yuan, up by 4.6 percent; the value-added of the secondary industry was 2,161.5 billion yuan, up by 12.5 percent; and the value-added of the tertiary industry was 1,849.8 billion yuan, up by 8.7 percent.

1. Agricultural production started well with steady increased acreage of grain crops. According to the sample survey of farmers' intention on farm crops plantation, the expected planting areas for grain would reach 105 million hectares, a year-on-year increase of 0.7 percent. Of this total, the planting areas for summer grain were up by 1.4 percent, and 0.4 percent growth for autumn crops. The planting areas for early rice maintained stable. At present, the winter wheat was growing well, therefore, a good harvest of summer grain is foreseeable.

2. Rapid growth was seen in industrial production with further improved efficiency. In the first quarter of this year, the total value-added of the industrial enterprises above designated size was 1,782.2 billion yuan, a year-on-year growth of 16.7 percent, or 0.5 percentage points higher than that in the first quarter of 2005 (growth in March was 17.8 percent with total value-added of 668.0 billion yuan). Of this total, the growth of heavy industry was 17.6 percent while that of the light industry was 14.7 percent. Analyzed by products, power generation and the production of coal was up by 11.1 percent and 12.0 percent respectively, the production of raw materials such as rolled steel, alumina, aluminum, and ten-kind of non-ferrous metals rose by 21.7 percent, 45.3 percent, 36.4 percent and 22.2 percent respectively. The production of electronic and telecommunication products such as microcomputers, mobile phones and fax machines rose by 40.1 percent, 57.1 percent and 21.5 percent. The production of motor vehicles went up by 36.3 percent, of this total, that of the cars went up by 70.5 percent.

Profits made by industrial enterprises increased rapidly. In the first quarter, the profits made by industrial enterprises above designated size stood at 336.3 billion yuan, a year-on-year increase of 21.3 percent. Of this total, profits by state-owned and state-holding enterprises were 158.4 billion yuan, up by 9.2 percent. In the first quarter, the sales ratio of industrial enterprises above designated size was 97.1 percent, down by 0.27 percentage points as compared with that in the first quarter of previous year.

3. Rapid growth was recorded in the investment in fixed assets. In the first quarter of this year, the investment in fixed assets of the country was 1,390.8 billion yuan, up by 27.7 percent, or an increase of 4.9 percentage points as compared with the growth in the same period last year. Of this total, the investment in urban areas reached 1,160.8 billion yuan, up by 29.8 percent (the investment in March was 631.4 billion yuan, up by 32.7 percent); that in rural areas was 230.0 billion yuan, up by 18.1 percent. Of the total investment in urban areas, the investment in real estate development was 279.3 billion yuan, up by 20.2 percent, or 6.5 percentage points lower than that in the same period of last year (in March it was 135.6 billion yuan, up by 20.7 percent). The investment in the primary industry was up by 47.1 percent, that in the secondary industry was up by 32.7 percent and 27.5 percent growth for investment in the tertiary industry. In terms of different sectors, the investment in coal mining went up by 43.2 percent, that in manufacturing industry was up by 36.3 percent, that in transportation, storage and postal services rose by 29.6 percent and 22.3 percent growth for investment in water conservancy, environment and public facilities management.

4. Sales on domestic markets speeded to some extent. In the first quarter, the total retail sales of consumer goods reached 1,844.0 billion yuan, a year-on-year rise of 12.8 percent (it was 579.7 billion in March, up by 13.5 percent), or a real growth of 12.2 percent or 0.3 percentage points higher after deducting price factors. Of the total, the retail sales in urban areas reached 1,241.0 billion yuan, up by 13.5 percent, the retail sales at and below county level stood at 603.0 billion yuan, up by 11.5 percent. In terms of different sectors, the sales by wholesale and retail business was 1,555.1 billion yuan, up by 12.9 percent and that by lodging and catering industry was 254.2 billion yuan, up by 14.2 percent.

5. Market prices rose moderately. China registered a year-on-year rise of 1.2 percent (it was 0.8 percent growth in March) in total consumer price level in the first quarter, or 1.6 percentage points lower compared with the same period of last year. The price rose by 1.2 percent in cities and 1.1 percent in rural areas. In terms of commodity categories, prices for food rose by 1.9 percent, or a drop of 4.2 percentage points compared with the same period of last year, and prices for housing were up by 5.0 percent. Prices for other categories of commodities either maintained the same level or had slight decline. The retail prices of commodities rose by 0.5 percent year on year in the first quarter (a 0.2percent growth in March). The producer's price for manufactured goods rose by 2.9 percent (2.5 percent growth in March). The purchaser's price for raw material, fuel and power rose by 6.5 percent (6.2 percent in March).

6. Foreign trade continued to grow rapidly and foreign direct investment continued to increase. The total value of import and export for the first quarter was US$ 371.3 billion, up 25.8 percent year, or 2.7 percentage points higher. Of the total, value of export was US$ 197.3 billion, up by 26.6 percent or 8.3 percentage points lower than the same period of 2005, and the value of import was US$ 174.0 billion, up 24.8 percent or 12.6 percentage points higher. The trade surplus was US$ 23.3 billion. The total value of foreign capital actually utilized was US$ 14.2 billion, up by 6.4 percent. By the end of March, China registered a total of US$ 875.1 billion in foreign exchange reserves, an increase of US$ 56.2 billion over the end of 2005.

7. Urban and rural residents' income kept fast growth. In the first quarter, the per capita disposable income of urban residents was 3,293 yuan, a real growth of 10.8 percent, or 2.2 percentage points higher. The per capita cash income of rural residents was 1,094 yuan, up by 11.5 percent year-on-year in real terms, or down by 0.4 percentage point.

The above statistics show that the national economic and social development is on the upbeat featured by fast yet stable economic growth, improved enterprises efficiency, rapid income growth for urban and rural households, stable market prices and brisk external and internal demands. However, it should be noted that there are prominent problems that call for our attention, such as rapid growth of investment in fixed assets and of bank loans, and difficulty in maintaining agricultural growth and increasing farmers' income. Nevertheless, as long as we continue to guide the overall economic and social development by a scientific approach to development, continue to follow various macroeconomic of the central government, enhance the monitoring of the trend of economic development, and adopt relevant measures to solve the existing problems; the national economic development will keep fast yet stable growth. (STATS.gov.cn)

Key points:

China's GDP in first quarter grows 10.2 pct

China's economy soared by a stunning 10.2 percent in the first quarter of this year, fueled by strong investment, a government spokesman said in Beijing on Thursday, while fanning away worries that the economy might be overheated.

Gross domestic product, the broadest measure of goods and service output, reached 4.33 trillion yuan (about 540 billion U.S. dollars), Zheng Jingping, spokesman of the National Bureau of Statistics, announced at a press conference held in Beijing on Thursday.

"The growth seems to be on the fast side, but I want to say such a rate still falls in the range of potential economic growth. It remains basically normal, though reaching the upper limit," he said.

"It should arouse concern, and actually has aroused our attention," Zheng added.

China's consumer price index, or the leading measure of inflation, climbed only 1.2 percent in the first three months. Economists are wary of a possible deflationary trend, citing the CPI growth of 1.8 percent in 2005.

In an interview with Xinhua, Wang Xiaoguang, a macro-economics research fellow with the National Development and Reform Commission, said he believes the economy is driven by hefty investment.

Investment in roads, factory equipment and other fixed assets totaled 1.39 trillion yuan, a sharp growth of 27.7 percent, or an increase of 4.9 percentage points year on year.

Investment in urban areas increased 29.8 percent to 1.16 trillion yuan, while that in rural areas reached 230 billion yuan, up 18.1 percent. China is launching a massive "socialist new countryside" campaign to boost rural development, in a bid to narrow a yawning urban-rural gap.

Wang said local governments arranged excessive big projects in 2006, the first year for China's 11th five-year development blueprint.

He called for intensified government efforts to tighten land approval and lending. In the first three months, Chinese banks consumed roughly half of the lending target for the whole year, adding 1.26 trillion yuan of loans, up 13.98 percent from a year ago.

The State Council, China's Cabinet, made a decision, at an executive meeting chaired by Premier Wen Jiabao last Friday, to move to avert a possible economic overheating by tightening controls on investment and money supply, but detailed plans have yet to be hammered out.

The growth of imports picked up tangibly, surging 24.8 percent in the quarter to 174 billion U.S. dollars, or a year-on-year rise of 12.6 percentage points.

The United States has been complaining about its huge trade deficits with China, contending that China's currency, the yuan, is artificially low, a factor in favor of Chinese exporters at the expense of American manufacturers.

In response to a journalist's question, Zheng said the U.S. deficit problem cannot be simply resorted to a yuan revaluation.

"In the short run, the exchange rate can play a minor role (in reducing U.S. deficits), but the key lies in lowering production costs and raising savings rates in the long run," he said.

China already revalued its currency by 2 percent last July, and the yuan has since appreciated an additional 1 percent, which the U.S. says is still too small.

President Hu Jintao is on a state visit to the United States. Officials from both sides have said talks would include trade and currency issues.

Earlier this month, a Chinese business delegation in the United States led by Vice-Premier Wu Yi pledged to purchase multi-billions of dollars worth of U.S.-made commodities including Boeing aircraft.

China's economy has grown at an around 10 percent clip for each of the past three years.

Fixed assets investment up 27.7 percent in first quarter

China's investment in fixed assets in the first quarter of this year totaled 1,390.8 billion yuan (173.85 billion U.S. dollars), up 27.7 percent, or an increase of 4.9 percentage points year on year, official figures showed.

The National Bureau of Statistics said the investment in urban areas reached 1,160.8 billion yuan, up 29.8 percent, while the investment in the country's rural area came to 230 billion yuan, up 18.1 percent.

Retail sales up 12.8 percent in first quarter

China's retail sales of consumer goods in the first quarter of 2006 reached 1,844 billion yuan (230.5 billion U.S. dollars), rising 12.8 percent year-on-year, or a real growth of 12.2 percent, or 0.3 percentage points higher year-on-year after deducting price factors.

Spokesman Zheng Jingping of the National Bureau of Statistics (NBS) made the announcement in Beijing Thursday at a press conference held by the State Council Information Office. Of the total, the retail sales in urban areas reached 1,241 billion yuan, up 13.5 percent, said Zheng.

The retail sales at and below county level stood at 603 billion yuan, up 11.5 percent, he said.

In terms of different sectors, the sales by wholesale and retail businesses were 1,555.1 billion yuan, up 12.9 percent, and that by lodging and catering industry were 254.2 billion yuan, up 14.2 percent.

Consumer price index up 1.2 pct in first quarter

China's consumer price index (CPI) rose 1.2 percent in the first quarter of this year, down by 1.6 percentage points year-on-year, the National Bureau of Statistics said in Beijing on Thursday.

The CPI for the country's urban area rose 1.2 percent and that for the rural area was up 1.1 percent, it said.

Food prices were up by 1.9 percent, down by 4.2 percentage points, while housing prices were up 5.0 percent, with prices of other products remaining roughly same as figures of last year's same period.

Industrial production up 16.7 percent in first quarter

China's industrial production in the first three months of 2006 totaled 1,782.2 billion yuan (222 billion U.S. dollars), rising 16.7 percent year-on-year, which was 0.5 percentage point higher than that in the same period of last year.

Zheng Jingping, spokesman with the National Bureau of Statistics (NBS) made the announcement Thursday at the press conference.

Of the total, the growth of heavy industry was 17.6 percent while that of the light industry was 14.7 percent, according to the NBS.

The production of power generation and coal rose 11.1 percent and 12 percent, respectively. The production of raw materials such as rolled steel, alumina, aluminum, and 10 kinds of nonferrous metals jumped 21.7 percent, 45.3 percent, 36.4 percent and 22.2 percent, respectively, according to the NBS.

The production of electronic and telecommunication products such as microcomputers, mobile phones and fax machines rose 40.1 percent, 57.1 percent and 21.5 percent. The production of motor vehicles went up by 36.3 percent and that of cars rose 70.5 percent.

NBS spokesman: rapid money supply in first quarter arouses attention of central bank

The State Council and China's central bank are fully aware of the rapid growth in bank loan during the first quarter, Zheng said.

Between January and March, Chinese banks have provided 1.26 trillion yuan in bank loans, which is more than half of the 2.5-trillion-yuan annual target, Zheng said at a press conference held by the State Council Information Office.

He said money supply must be in line with economic development. "A rapid growth in bank loans may give economy a spur in short term. In the long run however, it may cause inflation and confusion to a healthy economy," he said.

Although the first quarter has seen a 14.7 percent rise in aggregated bank loan over the same period of last year, or 1.7 percentage points higher over the 13-percent amplitude for entire 2005, the figure is still lower than the amplitudes of 2003 and 2004, Zheng noted. (Xinhua)

Related story:

China says economy surges 10.2 pct in 1Q, calling growth "upper-limit"

China's economy soared by 10.2 percent in the first quarter, fueled by strong investment, a government spokesman said Thursday, dismissing fears that the economy might be overheating.

Gross domestic product, the broadest measure of goods and services output, reached 4.33 trillion yuan (540 billion U.S. dollars), said Zheng Jingping, of the National Bureau of Statistics.

"The growth seems to be on the fast side, but I want to say such a rate still falls in the range of the potential economic growth. It remains basically normal, though touching the upper limit," he said.

"It should arouse concern, and actually has caught our attention," Zheng added. ...