(Fig.1)

In recent years, China's national economy has maintained sustained, sound and rapid growth, economic efficiency has gradually improved, residents' income witnessed marked improvement, and there has been a basic balance of international payment. However, there have also emerged some unstable factors in economic life, including the excessive growth of fixed asset investment in some regions and industries. The year 2003 saw a 26.7 percent growth of society's fixed asset investment, of which the growth was 27.8 percent in the first quarter of the year, 31.1 percent in the first half year, and 30.5 percent in the third quarter. Since the beginning of this year, investment has continued to climb, reaching the peak in February, with the fixed asset investment growth rate in urban units standing at 53 percent.

Beginning from the second half of last year, the State Council has timely adopted a series of policy measures to curb investment demand. As a result of implementation of these measures, the momentum of rapid growth of investment has been kept down in some regions and sectors, the growth speed has declined to some extent. In January-Jun this year, the fixed asset investment in urban units grew 31 percent year on year, with the growth rate falling 1.8 percentage points from the same period last year; and 16.8 percentage points from the first quarter of this year.

(Fig.2)

As a result of the efforts of the CPC Central Committee and the State Council to bring the important role of finance control into play and tighten aggregate control and structural adjustment, currently finance control has achieved remarkable result and the momentum of monetary credit growth has slowed down.

By the end of June, the growth rate of broad money (M2) and that of narrow money (M1) both stood at 16.2 percent, down respectively by 3.4 and 2.5 percentage points from early this year, M2 dropped by 5.4 percentage points from the peak in August last year. In the first half of the year, loans in RMB granted by financial institutions increased 143.34 billion yuan, or 350.1 billion yuan less compared with the same period last year; by the end of June, the balance of RMB loans saw a 16.3 percent year-on-year growth, down by 4.8 percentage points from early this year, and 7.6 percentage points from the peak in August last year.

Monetary credit structure experienced continued optimization. Loans to overheated industries have been effectively checked, while credits to agriculture, the area of consumption, and expansion of employment have been further increased. In June loans to capital construction witnessed less increase for the first time, the growth in the month came to 83 billion yuan, 16.1 billion yuan less year on year. While in the first half of the year, under the circumstance of less increase in loans extended by financial institutions, loans to agriculture increased by 171.1 billion yuan, an increase of 28 billion yuan year on year.

(Fig.3)

Under the leadership of the Party Central Committee and the State Council, the various regions and departments have achieved initial results in checkup on investment projects in industries such as iron and steel, electrolytic aluminum and cement. In the first half of this year, investment in the said industries dropped month by month, the practice of building and expanding coking, ferroalloy and calcium carbide projects in some regions was effectively curbed. Investment in iron-steel and cement went up 54.7 percent and 56.5 percent respectively in January-June, lower than the 96.2 percent and 130 percent growth rate of the whole year 2003, also lower than both growth of around 100 percent level in the first quarter.

Examination and approval management has been strengthened over some high energy-consumption sectors, and the threshold of market access has been raised for some construction projects. First, the proportion of capital fund for construction projects in iron and steel, electrolytic aluminum, cement and real estate industries has been raised by 15 percentage points. Second, policies and standards for some related industries and sectors have been worked out, newly built projects are put under strict examination and verification in accordance with industrial policies and market access standards in the areas of environmental protection, security, energy consumption, technology and quality. Third, the scale of investment is put under control by strict use of land, rigorous control of money supply and checkup on fixed asset investment projects.

The successive adoption of these measures has effectively contained the production increase of some related industrial goods in some high-consumption industries and investment products. In June the increase value of cement production was up 13.2 percent year on year, falling 3.6 percentage points in April and 3.9 percentage points in May; crude steel increased 13.3 percent in May and 13.8 percent in June, falling respectively by 7.3 percentage points and 6.8 percentage points from April; steel product grew by 14 percent and 17.3 percent respectively in May and June, diving 9.4 percentage points and 6.1 percentage points respectively from April; pig iron went up by 13.9 percent and 15.5 percent respectively in May and June, shrinking 7.1 percentage points and 5.5 percentage points respectively from April.

(Fig.4)

Per-capita cash income for rural residents in the first half of this year ran to 1,345 yuan, up 16.1 percent year on year, a 10.9 percent growth in real terms, two-digit growth unprecedented in many years, the best year in terms of increased income since 1997.

In recent years, China's grain price has been hovering at a low level, the growth rate of per-capita net income of farmers has been fluctuating around 2 percent-4 percent. In the latter half of 2003, in view of the price hikes of grain and other farm products, the government again adopted a series of measures supporting agriculture, put in major efforts to improve the environment for farmers working in public projects in cities, and intensified the effort for transfer payment in rural tax-for-fee reform, despite the influence of SARS (Severe Acute Respiratory Syndrome) and natural disasters, farmers' income still had a fairly good (4.3 percent) increase. Since the beginning of this year, the central authorities have, in the process of strengthening and improving macro-control, taken various policies favorable to increasing farmers' incomes, in addition, under the impetus of the cohesive forces, such as the market environment, the situation wherein the fluctuation and even negative growth of farmers' income from cultivation, particularly from grain in the past few years will be reverted. Preliminary estimates show that the "three subsidies and one reduction" (direct subsidy for grain, subsidy for improved variety and farm machines and reducing agricultural tax) policy alone will push farmers income up by 2 percentage points. It is estimated that farmers' income from crop cultivation and aquaculture will grow in step with wage income, per-capita net income of farmers in the whole year is expected to exceed the 5 percent growth target as expected early in the year.

Analysis shows that the structure of farmers' income is experiencing major change, the characteristics of farmers' income in the first half of this year are as follows: wage income kept a steady growth, per-capita income reached 447 yuan, with the growth rate being 13.9 percent, per-capita income from non-local work stood at 154 yuan, a 15.3 percent growth; there was a considerable growth in farmers' income gained from sales of agricultural products, with the per-capital income being 589 yuan, up 18.9 percent; farmers' family cash income from secondary and tertiary industries amounted to 210 yuan per person, up by 15.4 percent. In addition, farmers' per-capita tax-fee burden was 11.5 yuan, down by 27.2 percent from the corresponding period of the previous year.

(Fig.5)

In midsummer, harvest of early season rice is going on vigorously in the south. Following a 4.8 percent growth in total summer grain output from last year's 96.22 million tons to 101.05 million tons, the sown area of China's early season rice this year was reportedly increased 8 million mu (15 mu = one hectare) over last year, with the gross output to be up by over 4 billion kg, a more than 13 percent increase. The summer grain output this year has reverted the situation of decreased production for four consecutive years, while the sown area of early season rice has also turned the tide of gliding for seven straight years. Sown area to grain this year is estimated to increase by around 40 million mu over that of last year, with the total area to exceed 1.5 billion mu, changing the situation of decline for five years in a row, grain output is expected to attain the goal of 455 billion kg for the whole year.

The pouring in of good news proves that the macro-control measures taken by the Party Central Committee and the State Council for strengthening agriculture and promoting the increase of grain production and farmers' income as the focus of work and important targets have produced tangible results, and grain production has presented a favorable trend.

(Fig.6)

Early this year, under the circumstance of a fairly high growth of investment and monetary credits, the pressure of market price hikes also increased. In the first quarter of the year, the general level of consumer price rose 2.8 percent year on year nationwide, with the growth rate being 2.3 percent points higher than the same period last year. Under the action of the series of macro-control measures adopted by the Party Central Committee and the State Council, the market price rise was kept within the controllable scope and the inflationary momentum was somewhat weakened in the first six months. In the same period, consumer price went up by 3.6 percent year on year, but from April the inflationary rate came down to some extent. Comparison made on a monthly basis shows consumer price fell 0.1 percent in May and 0.7 percent in June. After swelling for nine straight months since August last year, grain price witnessed a chain decline for the first time, with the rate of reduction being 0.5 percent in May and 0.6 percent in June.

To maintain stability of market price, the Party Central Committee and the State Council have, on the one hand, adopted measures to expand grain production and strengthen and consolidate the position of agriculture being the foundation of the national economy. On the other hand, they have intensified supervision over projects under construction, kept track of investment projects, raised the access threshold for some industries and reduce investment demands. At the same time, they stepped up credit management, exercised strict control on money supply and kept prices stable through expanding production, keeping down investment demand and reducing money supply. Thanks to the common efforts of various quarters, the surging momentum of market price was mitigated in May and June. For example, the ex-factory price of some industrial goods went up 4.7 percent in the first six months, but the chain price rose 0.2 percent and 0.4 percent respectively in May and June. The price of steel products and nonferrous metals dropped for two successive months. In the first half of the year, the purchasing price of raw and semi-processed materials, fuel and motive power swelled 9.8 percent year on year, with the rate of surge being 11.8 percent in June, the growth rate of chain price began to fall in April, with the rate in June being lower than that in May.

By People's Daily Online