2ND LD: China's economy records 9.1% growth in 2003

Asian Economic News, Jan 26, 2004

BEIJING, Jan. 20 Kyodo

(EDS: ADDING MORE INFO)

China's economy expanded 9.1% in 2003 from a year earlier, the highest growth rate since 1996 when it posted a 9.6% expansion, according to official figures released by the government Tuesday.

The growth rate in gross domestic product (GDP) on a preliminary basis, after adjusting for inflation, exceeded the expansion rate in 2002 by 1.1 percentage points, the National Bureau of Statistics said.

GDP for 2003 totaled 11,669 billion yuan (about $1.4 trillion) and per capita GDP was $1,090, the bureau said. It is the first time per capita GDP surpassed $1,000.

Although GDP was affected by the SARS outbreak in the first half and the growth rate in the April-June second quarter slowed to 6.7%, the country maintained strong economic growth for the full year, led by a hefty 26.7% increase in fixed-asset investments by the government and the private sector.

The first (January-March), third (July-September) and fourth (October-December) quarters recorded GDP growth rates of more than 9% -- 9.9%, 9.6% and 9.9%, respectively, Li Deshui, commissioner of the bureau, said at a press conference.

''In our hearts we thought it would be higher than 8.5%,'' Li said in response to a Chinese TV reporter's question about the 2003 GDP growth prediction versus Tuesday's announcement.

He called the growth ''a new, important milestone in Chinese economic development history.''

Industrial productivity, spending by increasingly wealthy consumers and further distance from the late 1990s Asian financial crisis pushed the economy up, Li said.

SARS hit the growth of China's tertiary industry, mainly the service sector. Li, however, said SARS and natural disasters did not hold back other areas of the economy.

China's estimate for 2003 -- the official figure will come out within 45 days -- matches independent predictions. ING Financial Markets in Hong Kong anticipated 9.0% growth and CLSA Asia-Pacific Markets placed the growth between 8% and 10%.

Government infrastructure spending fueled the 2003 economy, said Andy Rothman, a CLSA China strategist.

Exports and real estate construction helped the overall economy, while higher grain prices helped farmers, Peter So, head of China equity research with ING, said. He advised potential investors to look at trends in specific industries in addition to the macro trends.

For 2004, Li expected a slowdown in early 2004 because of import protectionism abroad plus time required for China's new tax laws to sink in. First quarter growth should be at least 7%, he said.

The government plans to set a target rate for GDP growth this year at around 7%.