China's gross domestic product, or GDP, totaled 5.03 trillion yuan, or 653 billion US dollars in the first quarter of 2007, a rise of 11.1 percent year-on-year or a record figure in recent years. The growth of 11.1 percent in GDP was driven up by a "troika" of investment, consumption and import and export. Then, what featured the economic performance in the first three months of the year?

A vital shift with a smaller range in investment growth and a rise of residents' consumption

China's fixed-assets investment roseby 23.7 percent to 1.75 trillion yuan (227.6 US dollars), four percentage points slower than the same period of last year. The excessive growth of investment poses one of the principal problems that have troubled the country's national economy. Meanwhile, with a relative fast growth of investment in western China, the ratio of investment in the central and western regions increased by 1.6 and 0.2 percentage points over the same 2006 period.

In sharp contrast with a drop in the growth range of investment, there has been a rise in consumption of residents. The nation's retail sales was up 14.9 percent year-on-year in the first quarter of 2007 with a rise of 15.3 percent in March, representing 2.1 and 1.8 percentage points higher respectively than in the same period of last year. For years, the Chinese economy has been driven chiefly by investment, and this projects the first turn or shift, which implies a somewhat improvement in the imbalance of investment and consumption, noted authoritative economic insiders.

In the meantime, marked increases have been reported with the income of both urbanites and rural residents, the economic performance of enterprises and the revenue of the state.

In the first quarter, urban residents had their per-capita disposable income rise 19.5 percent, and the real-term growth in their income was 5.8 percentage points higher year-on-year; the cash income of rural dwellers went up 15.2 percent, and the growth range was 0.6 percentage points over the like 2006 period, and the quarterly increase range in the income of rural residents hit an all time high in the decade.

The first three months witnessed "auspicious days" for Chinese industrial enterprises too. In January and February, enterprises with a sales revenue exceeding five million yuan (or 625,000 dollars) have yielded 43.8 percent more profits year on year, with a growth range of 22 percent over the same period of last year. The tax revenue, one of the leading sources for China's financial income, reached 1.1 trillion yuan, an increase range of 25.5 percent year on year.

Stark reality with energy saving, pollution control, international payment

Despite all good, fortunate tidings, there are still some problems in China's economic performance. First, there has been a fast, rapid growth in industrial production, particularly with production of industries involved high energy consumption. The six major high-energy-consuming industriial sectors recorded an average growth of 20.6 percent in the first quarter of the year, an average of 2.3 percentage points higher than those enterprises with a sales revenue exceeding five million yuan. Among them, the industries of oil refining, coking and nuclear fuel processing rose 10.6 percent, chemical fuel and chemical manufacturing increased by 22.1 percent, ferrous mineral smelting, rolling and processing increased by 27.5 percent, nonferrous mineral smelting and processing increased by 23.4 percent, and electricity, and thermal power generation and supply went up 14.5 percent.

Second, there has been an excessive trade surplus, with a resultant outstanding imbalance of international payment. The trade surplus reached 46.4 billion US dollars in the first three months, or 23.1 billion dollars more than the year-earlier level. By the end of March, the country's foreign exchange (forex) reserves stood at 1.202 trillion dollars, an increment of 135.7 billion dollars from the end of 2006. The high-rate increase in forex reserve has added both difficulties and pressures to the central bank with its mechanism to regulate money supply.

On alert against a shift toward over-heated economy

Diversified analyses focused on whether or not the Chinese economy was overheated before the latest figures were provided by the National Bureau of Statistics (NBS) on Thursday. NBS spokesman Li Xiaochao, nevertheless, did not voiced his acknowledgement on the topic. Whether the economy is overheated, he said, is a comprehensive question, and the judgment on the issue needed an overall consideration, and the GDP-growth indicator alone was not enough.

China's consumer price index, or CPI, a major inflation index, grew by 2.7 percent in the first quarter of the year and, if with the deduction of the factor for a 1.5 percent rise in food price, it came merely yo 1.2 percent, which equals that of 2006. And the prices of coal, electricity and oil are now relatively stable.

To date, an average per-capita income stands at between 1,000 to 3,000 US dollars. Based on the experience of other nations, this represents a take-off or creeping-uphill phase in a country's national economy. The merging, or integration or interaction of a relatively ample supplies and exuberant demands will, of course, result in fast economic growth.

From a short-term point of view, the fast economic growth in the first quarter of the year, which had been unprecedented or rare for previous years, was driven jointly by investment, consumption and import and export. In this "troika", a decline was reported in the growth range of investment, whereas there are fairly big increments in both consumption and the import-export trade.

Though a conclusion of being overheated still cannot be drawn with respect to the present Chinese economy, the GDP growth of 11.1 percent is, at all, a rather fast increment rate, and people should stil be all the more vigilant and on the alert instead of contending with the "rapid" economic growth rate. Moreover, the relevant macro-economic regulation and control departments in China are currently following changes in its economic performance, and they are expected to work out appropriate timly control measures in the years ahead in strict compliance with the changing situation in China and elsewhere in the world.

By People's Daily Online