National economy: steady growth in the 1st quarter

Li Xiaochao, Spokesman of NBS

April 16, 2008

In early 2008, in face of the unprecedented and sustained low temperature and ice storms and in face of the impact due to the spreading and growing of the subprime crisis, policies were put into place in an effective way, leading to a steady and fast economic growth.

According to preliminary estimation, the gross domestic product (GDP) of China in the first quarter of this year was 6,149.1 billion yuan, a year-on-year increase of 10.6 percent, which was 1.1 percentage points lower than that in the same period last year. The value added of the primary industry was 472.0 billion yuan, up by 2.8 percent, or down by 1.6 percentage points; that of the secondary industry was 3,077.8 billion yuan, up by 11.5 percent, or 1.7 percentage points lower; and that of the tertiary industry was 2,599.3 billion yuan, up by 10.9 percent, down by 0.4 percentage point.

1. Post disaster reconstruction of agriculture progressed smoothly, the momentum of spring cultivation was good. Though the low temperature and ice storms in early this year caused various degrees of negative impacts on agricultural production in some areas, the post disaster reconstruction and recovery work achieved significant results and agricultural production made a good recovery. According to a sample survey of farmers' intention on farm crops plantation, the expected planting area for grain would reach 105.62 million hectares, of which the planting area for summer grain was 26.74 million hectares, 5.83 million hectares for early rice and 730.5million hectares for autumn crops. At present, the growth of crop seedlings of winter wheat was good while the overall situation was better than that in the previous year. The proportion of first and second grade seedlings accounted for 82.3 percent of the total, which was 2.8 percentage points higher than that of last year. In the first quarter of this year, the total output of pork, beef, mutton and poultry meat reached 19.17 million tons, a year-on-year growth of 3.7 percent, and the output of pork, specifically, was 12.84 million tons, up by 2.3 percent.

2. The growth rate of industrial production slowed down coupled with a drop of profits made by enterprises. In the first quarter of this year, the total value added of the industrial enterprises above designated size was up 16.4 percent year-on-year (growth in March was 17.8 percent), or 1.9 percentage points lower than that in the first quarter of 2007. Analysis on different types of enterprises showed that the value added growth of the state-owned and state holding enterprises went up by 12.9 percent; collective enterprises, 11.6 percent; share-holding enterprises, 18.9 percent; and 14.3 percent growth for enterprises funded by foreign investors or investors from Hong Kong , Macao and Taiwan provinces. The year-on-year growth of heavy industry was 17.3 percent, and 14.7 percent for the light industry. If grouped by products, power generation and the production of coal were up by 14.0 percent and 14.6 percent respectively; the production of crude steel and steel products rose by 8.6 percent and12.2 percent respective; and the production of motor vehicles went up by 15.8 percent, and its car sector went up by 14.7 percent. The production and market of industrial products went on well. In the first quarter of this year, the sales ratio of industrial products was 97.7 percent, an increase of 0.5 percentage point over that in the previous year.

In the first two months of this year, the profits made by industrial enterprises above designated size stood at 348.2 billion yuan, a year-on-year increase of 16.5 percent, or 27.3 percentage points lower. Among the 39 industrial divisions, 34 divisions registered year-on-year growth with profits. The top five divisions of profits were petroleum and natural gas exploitation; coal mining and washing; manufacturing of transportation equipment; farm and sideline products processing industry; and manufacturing of general telecommunication equipment, computers and other electronic equipment. Due to the price rise of crude oil and coal, the petroleum processing and coking, and the nuclear fuel processing industry suffered loses early this year whereas they were profitable in the previous year. The profits made by power and heating production and supply industry witnessed a sharp decline. If the aforementioned two industries were not included, the profits made by the enterprises went up by 37.5 percent over the same period last year, or 6.1 percentage points higher.

3. Investment in fixed assets enjoyed steady growth and the proportion of investment in central and western areas increased. In the first quarter of this year, the investment in fixed assets of the country was 2,184.5 billion yuan, a year-on-year growth of 24.6 percent, or a rise of 0.9 percentage point as compared with the growth in the same period last year. The investment in urban areas reached 1,831.7 billion yuan, up by 25.9 percent, or 0.6 percentage point higher while that in rural areas was 352.9 billion yuan, up by 18.3 percent, or a rise of 1.6 percentage points. The investment in real estate development in urban areas was 468.8 billion yuan, up by 32.3 percent, or 5.4 percentage points higher than that in the same period last year. The investment in the primary industry, secondary industry and the tertiary industry in urban areas went up by 80.8 percent, 25.9 percent and 25.3 percent respectively; that in east, central and western areas grew by 22.3 percent, 35.2 percent and 27.7 percent respectively. The proportion of investment in central and western areas out of the national total rose by 1.5 and 0.2 percentage points over that in the same period last year.

4. Sales on domestic markets accelerated and the growth of both urban and rural consumption rose hand in hand. In the first quarter, the total retail sales of consumer goods reached 2,555.5 billion yuan, a year-on-year rise of 20.6 percent (up by 21.5 percent in March) which was 5.7 percentage points higher than that in the same period last year. The retail sales in urban areas reached 1,737.7 billion yuan, up by 21.2 percent, and the retail sales at and below county level stood at 817.8 billion yuan, up by 19.3 percent. Grouped by different sectors, the sales by wholesale and retail businesses was 2,149.0 billion yuan, up by 20.4 percent and that by lodging and catering industry was 368.7 billion yuan, up by 23.6 percent. Among the sales by wholesale and retail businesses above designated size, the sales of vehicles, petroleum and petroleum products, furniture and jewelries all witnessed over 30 percent growth.

5. Prices were on a higher level and the sales prices of housing continued to rise. In the first quarter of this year, the consumer price index went up by 8.0 percent (8.3 percent growth in March, the month-on-month change was down by 0.7 percent), 5.3 percentage points higher than that in the same period last year. The price rose by 7.8 percent in cities and 8.7 percent in rural areas. Grouped by commodity categories, prices for food rose by 21.0 percent, contributing 6.8 percentage points to the overall price rise; and prices for housing were up by 6.6 percent, contributing another 1 percentage point. Prices for other categories of commodities witnessed slight rises or drops. In the first quarter of this year, the retail prices of commodities rose by 7.4 percent year on year (a 7.8 percent growth in March), or 5.3 percentage points higher than that in the same period last year. The producer's prices for manufactured goods rose by 6.9 percent (8.0 percent growth in March), which was 4.0 percentage points higher. The purchaser's prices for raw material, fuel and power rose by 9.8 percent (by 11.0 percent in March), or 5.7 percentage points higher than that in the same period last year. The year-on-year growth of the prices for housing in 70 large and medium-sized cities went up by 11.0 percent (10.7 percent in March), or 5.4 percentage points higher.

6. The growth rate of export declined, the growth of actually utilized foreign capitals accelerated. The total value of imports and exports for the first quarter was US$ 570.4 billion, up 24.6 percent year-on-year, which was 1.3 percentage points higher than that in the same period last year. The value of exports was US$ 305.9 billion, up by 21.4 percent, a drop of 6.4 percentage points, and the value of imports was US$ 264.5 billion, up 28.6 percent, a rise of 10.4 percentage points. The trade surplus was US$ 41.4 billion, a decline of US$ 4.9 billion over the same period last year. Due to the high base figure in February last year, the export growth in February this year was 6.5 percent, down by 45.2 percentage points over that a year earlier. However, it picked up by 30.6 percent in March, or 23.7 percentage points higher. In the first quarter of this year, the total value of foreign direct investment actually utilized was US$ 27.4 billion, a year-on-year growth of 61.3 percent. At the end of March, China registered a total of US$ 1,682.2 billion in foreign exchange reserves, an increase of US$ 153.9 billion over the end of 2007.

7. Urban and rural residents' income continued to increase, and a steady growth of employment was achieved in urban areas. In the first quarter, the per capita disposable income of urban population was 4,386 yuan, a year-on-year growth of 11.5 percent. The per capita cash income of rural population was 1,494 yuan, up by 18.5 percent year-on-year. In the first quarter of this year, the total newly increased employment in urban areas reached 3.03 million, fulfilling 30.3 percent of the target of 10 million for this year. Of this total, the re-employment of the laid offs were 1.28 million, fulfilling 25.6 percent of the annual target of 5 million.

8. Growth rate of money supply dropped, the newly increased credits declined slightly. By the end of March, the broad money (M2) was 42,305.5 billion yuan, a year-on-year growth of 16.3 percent, which was 1 percentage point lower. The narrow money (M1) was 15,086.7 billion yuan, a rise of 18.3 percent, or 1.6 percentage points lower. The cash in circulation (M0) was 3,043.3 billion yuan, up by 11.1 percent or 5.6 percentage points lower. The outstanding loans of all financial institutions increased by 1,332.6 billion yuan over that at the beginning of this year, or a drop of 89.1 billion yuan as compared with the same period last year. The increase of outstanding deposits of all financial institutions was 2,635.3 billion yuan, or 760.6 billion yuan more than the same period last year. In the first quarter of this year, the net supply of currency was 5.8 billion yuan, a drop of 25.8 billion yuan over that a year ago.

We should adhere to the scientific approach to development, carefully implement various policies set by the central economic working conference and the government work report, and continue to implement sound financial policies and tight monetary policies. The national economy will achieve sound and fast growth in the year by following the guiding principles of controlling the aggregates, stabilizing the prices, adjusting the structure and promoting balanced development and by making appropriate controls over the pace, focal points and strength of the macro policies.