For the third consecutive year, the Chinese economy has grown at a rate of about 10 percent, laying very solid foundations for pressing ahead with the 11th Five-Year Plan, from this year.

 

Preliminary estimates indicate China's gross domestic product (GDP) soared to 18.2 trillion yuan (US$2.2 trillion) last year, up 9.9 percent over the previous year.

 

Though it was marginally lower than the 10.1 percent growth in 2004, the rate remains impressive given the measures taken to rein in excessive investment in overheated sectors since late 2004.

 

The robust growth demonstrates not only the immense resilience of the Chinese economy as it has survived tough macroeconomic controls, but also its great potential to grow in a more efficient and balanced way.

 

For instance, the country managed to cut consumption of crude and refined oil by 0.5 percent last year. To fuel similar growth a year ago, the country had to increase oil consumption by 15.3 percent.

 

The year 2005 marked a successful end to the first five-year period of the 21st century.

 

That the country's per capita GDP reached US$1,700 last year, doubling that in 2000, implies the national economy has fared better than expected in delivering the nation's ambition of quadrupling GDP in the year 2000 by 2020.

 

But while applauding these big strides that China has made in achieving its quantitative economic goals, we should also focus on other challenges that must be overcome if a comprehensively well-off society is to be created.

 

On one hand, to sustain growth momentum, the country needs to make greater efforts to boost consumption while reducing its dependence on breakneck investment growth and ballooning trade surpluses.

 

As two super growth engines, investment jumped by 25.7 percent and the trade surplus roughly tripled compared to the previous year. They are crucial to our economic growth and, in themselves, evidence of growth potential and competitiveness in the increasingly globalized economy.

 

But for a huge economy like ours, relying too much on investment and trade is unbalanced. Such a strategy exposes the country's long-term growth to either overcapacity at home or politically-driven fluctuations on the international market.

 

Making better use of the domestic market is the logical answer. A nationwide consensus has made boosting consumption a key part of the new five-year development blueprint.

 

Undoubtedly, the latest statistics add fresh support to the shift in focus of our economic policies.

 

On the other hand, to render fast economic growth into substantial improvements in standards of living, the income disparity must be narrowed and a social welfare network created that benefits everyone, especially low-income groups.

 

According to the latest figures, the income gap between urban and rural residents is still widening.

 

Thanks to the scrapping of agricultural taxes and rising grain prices, farmers' income grew at a speed close to that of their urban cousins in 2004. Despite this the growth of urban residents' average income gained by 1.9 percentage points while that of farmers slowed by 0.6 percentage points last year.

 

While the country is trying to promote social equity, such a change in income distribution suggests the matter needs more attention from policy-makers.

 

Strong economic growth is a precondition of realizing common prosperity for the people. Yet, to make it sustainable, the country still has a lot to do to upgrade its growth pattern and improve the way income is distributed.

 

(China Daily January 26, 2006)