China’s economy has maintained its rapid growth during last five months owing to effective macro-control measures by the central government, said Cao Yushu, spokesman, deputy secretary-general and director general of the Office of Policy Studies of National Development and Reform Commission, at a press conference yesterday.

In the first five months of this year, industrial added value increased 18.1 percent. Fiscal revenue shot up 32.4 percent to 1.2 trillion yuan (US$145.0 billion), a year-on-year increase of 293.3 billion yuan (US$35.4 billion).

The government tightened credit controls and the growth rate of credit supply shrunk as a result. The People’s Bank of China, the country’s central bank, pulled back the reins on commercial banks whose lending had increased substantially, with a view to curtailing their capacity to grant credit. It also controlled credit supply to overheating sectors such as steel, while meeting capital demand for projects that are conducive to structural readjustment, consumption expansion and job creation.

The country restored order to land markets, especially in development zones, by more strictly regulating land utilization. Efforts have been made to examine and dispose of projects under construction or to be constructed, while criteria for approval of new projects have been raised.

The central government improved coordination of coal and oil supply, power generation and transportation capacity.

China promulgated a series of policies to encourage grain production, such as direct subsidies to farmers, subsidies on fine seeds and reduction or abolition of the agricultural tax. Recently, the State Council approved the reform plan for the grain marketing system and convened a national meeting to deploy an across-the-board grain reform.

The measures have reined in investment growth. From January to May, total urban fixed asset investment amounted to 1.5 trillion yuan (US$186.0 billion), up 34.8 percent over the same period last year. But compared with the preceding four months, investment growth rates in steel, non-ferrous metals and cement dropped 22.5, 9.7 and 23.7 percentage points, respectively; and real estate investment was down 2.6 percentage points.

May grain prices edged down 0.5 percent from the previous month, the first drop since last August.

An increase in the yield of summer grain crops is foreseeable. According to the forecast by the Ministry of Agriculture, the wheat yield will gain about 2.5 billion kilograms, reversing four consecutive years of decline. The total yield of summer grain crops is expected to be approximately 100 billion kilograms. By the end of May, the total acreage given to spring sowing reached 776 million mu (51.7 million hectares), a year-on-year increase of 30 million mu (2 million hectares).

In May, the total industrial added value of enterprises above the statistical tolerance minimum grew 17.5 percent over the previous month. The growth rate of output fell significantly in overheating sectors. In the meantime, coal output, power generation and transportation capacity have maintained steady growth.

May retail sales climbed 17.8 percent year-on-year. In the January-May period, total retail sales grew 12.5 percent year-on-year. Sales of commercial housing advanced 44.9 percent and automobiles rose 53.2 percent.

Total foreign trade in May climbed 34.1 percent, to US$87.6 billion, with exports growing 32.8 percent to US$44. 9 billion and imports reaching US$42.8 billion, up 35.4 percent. The year’s first trade surplus amounted to US$2.1 billion. Contractual foreign direct investment was US$57.2 billion and actual FDI reached US$25.9 billion, growing 49.8 percent and 11.3 percent, respectively, from the previous year.

Cao Yushu also pointed out that challenges and problems still exist. These include a relatively high rate of investment growth and improper investment mix as well as an improper loan mix. The precarious supply and demand relationship between coal, power, oil and transportation and potential imbalance in grain supply and demand could put upward pressure on prices.

(China.org.cn by Guo Xiaohong June 24, 2004)