China's economy posts growth of 7.6%, but concerns remain
China's economy grew 7.6% (GDP) to RMB 210.2 trillion in the first quarter, thanks to strong growth in exports and heavy government spending. Exports climbed 9.9% to RMB 534 billion, the high rate masking an abrupt slowdown in March, to 3.4% year-to-year. Imports grew 5.2% to RMB 474 billion. With reference to the uncertain world economic development after September 11, Moftec vice-minister Zhou Keren cautioned against optimism and forecast a conservative zero growth for China's exports this year.
China's foreign direct investment in the first quarter of this year increased by 27.5% from the same period last year to USD 10.1 billion. In the same period, investment commitments or "contracted FDI" reached USD 17.9 billion, rising 11.4%.
Fixed asset investment rose by 19.6% to RMB 467.2 billion, with spending on infrastructure projects up 20.6% and on property up 36.2%.
Government spending rose 23.9% year-on-year to RMB 351 billion while revenue grew just 3.4% to RMB 380.78 billion. Finance Minister Xiang Huaicheng said the country's fiscal system was troubled and its growth remained dependent on deficit spending. "No country, and no finance minister, can carry out a proactive fiscal policy over the long term and not have some problems emerge." His comments indicate a fierce spending-policy debate in the Government. Figures published by the central bank gave further ammunition to those who argue the spending policy is not working. At the end of last month individual bank deposits rose RMB 505.1 billion from a year earlier to RMB 7.9 trillion, a 15.2% increase from a year earlier, while consumer loans rose only RMB 48 billion.
While savings rose, overall money supply growth accelerated. M2 was 14.4% higher at the end of March than a year earlier, topping the central bank's 13% to 14% growth target for 2002. M1 increased 10.1%, and M0 gained 8.2%. Forex reserves were up 29% year-on-year.
Meanwhile, China's State Statistic Bureau affirmed the government's inflation forecast for 2002 of between 1% and 2%. China's consumer price index (CPI) fell 0.8% on the year in March. Retail sales during the quarter were RMB 1.004 trillion, an increase of 8.4% over the same period last year, when growth was 10.3%. Analyst said negative CPI was not a major cause for concern, but declining retail sales growth was. consumer demand accounts for about 60% of GDP growth.
(various sources)

China's Asia Forum limps to apologetic close
Messily organised and awkwardly staged, the inaugural meeting of the Boao Asia Forum, China's first attempt at institutionalising a top-level international conference on the mainland, limped to an apologetic close on the weekend. Zhu Rongji, China's premier, apologised in a private meeting to the foreign and Chinese sponsors, which included Goldman Sachs, CNN, Siemens and Audi, for the poor organisation. (FT, 15 April) The national media were rather more enthusiastic.

Japan wavers on financial aid to China
Japan will provide USD 1.22 billion in loans to China for the fiscal year ending April 2003. The amount is down 25% from that of the previous fiscal year. The Chinese Government expressed its understanding of Japan's battered economic and fiscal conditions and need to reform its official development aid programs. Minister of Foreign Affairs Tang Jiaxuan said that "some Japanese are afraid that the loans are nurturing a powerful competitor". (Business Weekly, 16 April)

Tax cuts no longer a stimulus - minister
China will not resort to tax cuts to fuel its economic development this year, Finance Minister Xiang Huaicheng said. His remarks came after some experts claimed that the growth of tax revenue in recent years was much faster than that of economic growth. Tax cuts will be of little help to China's economic development, because the variety of indirect taxes include value-added tax, consumption tax and business tax which made up more than 50% of the country's overall tax income, Xiang said. (China Daily, 17April)

Microsoft keeps facing difficulties local market
Despite strong brand recognition, the company's public image has been damaged by extremely high prices, overly aggressive anti-piracy campaigns and its alleged monopoly practices. Microsoft China's net income in 2000 is estimated at about USD 100 million. The company's global net income amounted to USD 25.3 billion in the 2001 fiscal year. (www.cbiz.cn, 17 April)

China Eastern orders 20 Airbus jets for USD 800 million
China Eastern Airlines signed a contract with Airbus to buy 20 Airbus A320 jetliners. The order was a breakthrough for Airbus, which hadn't made any major sales to China in five years. (ChinaOnline, 17 April)

Mainland eclipses U.S. as Taiwan's No. 1 export destination
According to statistics released by Taiwan, the mainland has replaced the United States to become the island's biggest export destination. Taiwan's exports to the mainland account for 23% of the island's overall exports, compared with the 21% exported to the United States. (ChinaOnline, 17 April)

Alstom pulls out of China JV with Electricite De France
Alstom's pullout from a USD 616 million joint venture with Electricite de France highlights the troubled state of foreign investment in China 's electricity sector, which was once touted as a source of rapid earnings. The Laibin deal was signed in 1997 with great fanfare, using a novel contract structure known as build-operate-transfer. (Dow Jones Newswires, 17 April)

China stuck with USD 500 million unpaid annual heating bill
Chinese who don't pay their heating bills cost the state almost USD 500 million each year. The national heating system is a remnant of the communist-era command economy and welfare system. But like most of the state sector, the system is now decrepit and riddled with corruption. (Dow Jones Newswires, 18 April)

Private enterprises top 2 million
At the end of 2001, there were 2.03 million private enterprises throughout China, an increase of 15.14% over the previous year. 1.29 million were in urban areas, up 19.64%, and 737'300 were in rural areas, up 8.01%. There were 27.14 million people engaged in private enterprises, an increase of 12.77%. (ChinaOnline, 18 April)

Statistician rejects foreign criticism of growth figures
The deputy director of China's State Statistical Bureau has defended the accuracy of its data and attacked foreign critics as illogical and ill-informed. It is not only foreign specialists who are sceptical of bureau figures. Many members of the public dismiss them as the creation of officials eager to advance careers and hide failures, by reporting what superiors want to hear. Last year, all but one of the provinces and regions reported a higher economic growth figure than the national one, which means many or most were lying. (SCMP, 18 April)

Investors' confidence hurt
A recent survey indicates that over 90% of domestic entrepreneurs were engaged in contract disputes last year. Defaults on payment of debt, fake or shoddy products, false advertisements and patent infringements are among the causes of contract disputes. When the problem spreads, it will affect not only the managers or certain enterprises, but also the whole national economy. (China Daily, 18 April)

Taiwan plans to restrict high-tech engineers from working in China
Taiwanese engineers who design semiconductors, missiles, jet fighters and submarines may be barred from working in rival China. The restrictions are part of a plan to prevent China from getting access to technologies developed in Taiwan. Taiwan has been particularly concerned about losing engineers from its vital semiconductor industry. China hopes it can someday overtake Taiwan's key worldwide position in the sector. (Yahoo News, 18 April)

Exporters get credit guarantee promise
China will increase the amount of export credit guarantees for domestic companies and cut premiums to help firms explore relatively untapped markets such as Latin America, the Middle East and Russia. The country will also extend export credit guarantees to private and foreign-funded companies in recognition of their role in sustaining the rapid growth of China's exports. (China Daily, 18 April)

China Beijing airport mulls RMB 9 billion expansion plan
Beijing Capital International Airport plans a RMB 9 billion expansion to prepare for traffic growth ahead of the 2008 Olympic. The expansion plan involves building a new runway and a new terminal. (Dow Jones Newswires, 18 April)

Beijing to build 2nd Airport before 2008 Olympics
Beijing is planning to build a second airport before the 2008 Olympic Games even though a new terminal is already planned at the existing international airport. A new runway and terminal at the existing airport are due to open to the public and air traffic in 2007. (People's Daily, 19 April)

Expert calls for more financial aid to SMEs
China's small and medium-sized enterprises are seriously in need of credit, despite a government campaign to encourage financing for small firms years ago, said Fan Gang, director of the National Economic Research Institute. Squeezed between the tasks of reducing their bad assets and dealing with formidable foreign competition following the nation's entry to the WTO, China's commercial banks are withdrawing from small cities, where the bulk of the smaller firms are located. (China Daily, 19 April)

IMF urges for flexible Renminbi - central bank says no need
While the International Monetary Fund urged China to consider a more flexible exchange rate, the country's central bank stated there is no real economic reason for the Renminbi to appreciate. The IMF warned the rise of imports might outpace the expected growth in export demand caused by the global economic recovery. However, the IMF argues rising inflows of foreign investment, favorable debt indicators and high foreign reserves are likely to protect China against the effects of possible weakness in the external demand and investor confidence. (www.cbiz.cn, 19 April)
http://www.imf.org/external/pubs/ft/weo/2002/01/

IMF: China's growth rate to reach 7% in 2002
The International Monetary Fund predicted that growth rate in China would be about 7% in 2002 and 7.4% in 2003. The IMF said the recent easing of monetary policy in China is appropriate, especially as the deflationary pressure has reemerged and the real interest rate edging up. (People's Daily, 19 April)

China produces 70.2% of world's aquaculture
China produces 70.2% of the world's farmed fish and other aquaculture products, a senior official with the Food and Agriculture Organization said. (People' Daily, 19 April)

EU official raps investment rules
New rules on foreign investment in the country's telecommunications sector appear to violate the spirit of the WTO, according to a European official, indicating a new area of friction between the major trading partners. (SCMP, 19 April)

China protests as Dutch destroy Chinese animal products
China has protested strongly over moves taken by the Netherlands to destroy containers of Chinese animal products stored in Rotterdam on the grounds that the products breached EU import regulations. (Xinhua Net, 18 April) Action leads to reaction…

China stops import of animal-related foods from Netherlands
China bans the import of animal-related food products from the Netherlands. The proclamation said that Jiangsu Provincial Administration for Entry-Exit Inspection and Quarantine spotted chloramphenicol residue in salted pork intestine casings for sausages. It also stated that all the animal-related foods coming into China from the Netherlands before the issuance of the proclamation shall be checked strictly and those containing poisonous residue will be destroyed. (Xinhua Net, 19 April)