National economic and social development is facing a series of tough challenges even though the gross domestic product (GDP) for the first half of this year hit a year-on-year increase of 8.2 percent.

This was revealed by Ma Kai, minister of the State Development and Reform Commission.

Ma delivered a report on the performance of this year's national economic and social development plan so far to the Standing Committee of the 10th National People's Congress yesterday at the committee's latest session.

He said the GDP for the first six months of this year was over 5 trillion yuan (US$605 billion), an increase of 8.2 percent over the figure for the same period of last year.

However, Ma cautioned that the country is still facing challenges such as lagging public health services, high unemployment pressures, difficulty in raising farmers' income, unreasonable structure in some industries, a rapid increase in loan amounts and tough flood and drought conditions.

The impact of severe acute respiratory syndrome, or SARS, on the country's economic development has not been completely eliminated and the most severely hit sectors such as civil aviation and tourism as well as some small and medium-sized enterprises still need some time before they will see a full recovery, Ma said.

The service industry has become the main channel for the expansion of employment, providing 70 per cent of new job opportunities in recent years.

But the service sector was the one most seriously hit by SARS this year.

Ma pledged to encourage the development of small and medium-sized enterprises, labour intensive industries and the private sector, and take measures to push for the development of public health services, urban environmental protection, and community service, so as to create more job opportunities.

He also vowed to further reduce the financial burden of farmers and to encourage them to readjust agricultural structure to increase income.

Turning to industrial structure, Ma said inadequately researched investment and wasteful duplication of projects have risen in the steel, construction materials, nonferrous metal, automobile and textile industries.

The minister said the country will enhance industrial planning and policy guidance, implement tougher industry access in the areas of technology, quality, safety, environmental protection and power consumption to check inadequately researched investment.

Ma also warned against the rapid growth in loans. The total amount of new loans granted by the country's financial institutions in the first seven months of this year has already exceeded the total amount of loans granted last year.

Ma said that this may lead to more non-performing loans when the consumer credit systems and internal control systems of the banks are not sufficiently sound.

(China Daily August 26, 2003)