Beijing's economy completed its eighth consecutive year of double-digit growth in 2006, thanks to infrastructure investments and consumption.

The Beijing Bureau of Statistics yesterday announced that the city had an output of 772 billion yuan (US$99.3 billion) last year, 12 percent more than in 2005. This means it had a per capita gross domestic product (GDP) of US$6,210, 8.8 percent more than the previous year.

Deputy bureau chief Yu Xiuqin said that according to the Work Bank's classification, Beijing's per capita GDP puts it in the "upper middle-income economies".

She told a press conference that the economy maintained a stable and healthy development last year, and an important driving factor was the work for the 2008 Olympic Games.

"Hosting the Olympics has had, and will continue to have, a profound impact on Beijing's economy."

Though she couldn't give the exact amount that the preparations were costing Beijing, she said that last year 93.5 billion yuan (US$12 billion) was spent on infrastructure, 53.2 percent more than in 2005.

In addition to the infrastructure bill, there's a budget of about US$2 billion to run the Games, excluding building of the 31 Olympic venues, local media have reported.

Responding to fears that Beijing's, and even China's, economy could see a reverse trend after the Olympics investment frenzy is over, Yu said the Games were just one of the factors behind the fast growth.

"Beijing's economic development has been growing steadily for several years," she said. "And as long as we stick to sensible and positive policies, the good economic growth will continue."

Apart from the Olympics, the other factors influencing Beijing's growth were its huge consumption market and a wholesale shift in spending priorities that made its service industry account for 70 percent of the output.

According to available data, consumer spending in the city last year hit 327.5 billion yuan (US$42 billion), an increase of 12.8 percent over 2005. Compared to food and clothes, the sale of cars and houses saw a bigger increase.

"The consumption pattern for the Chinese has shifted from food and clothing to real estate, cars, and mobile phones... This is what drives our development," Yu said. Upgrading of technology in State-owned enterprises, too, contributed to the growth.

The rapid growth, however, has not been at the expense of the environment. Figures show that water consumption per unit of GDP dropped 11.2 percent, and total sulphur dioxide emission was cut by 7.9 percent last year, Yu said. Energy consumption per unit of GDP fell, too.

Despite all this, the economic picture is not completely rosy. The bureau said micro-control measures over the real estate market and lending were still not effective. And the huge income gap between people in the cities and rural areas may threaten future economic growth.

(China Daily January 25, 2007)