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Rapid start to new plan
2006-04-21
China Daily
The 10.2 per cent growth of the Chinese economy in the first quarter demonstrates how promptly the country is carrying out its new five-year development plan.
Double-digit growth of the gross domestic product (GDP) has heralded a good beginning to the 11th Five-Year Plan (2006-10), in terms of the speed of economic development.
However, a faster than expected growth is not the only requirement to deliver the nation's new development strategy.
To pursue the goal of energy-saving and environmentally friendly growth, the policy-makers must pay more attention to problems that robust GDP growth alone cannot fix, if not frustrate their solutions.
Much public concern has been focused on the rapid growth of investment and bank loans.
Investment in fixed assets in the past quarter jumped to 1.39 trillion yuan (US$173.5 billion) with a sharp growth of 27.7 per cent, or an increase of 4.9 percentage points year on year. Meanwhile, Chinese banks granted 1.26 trillion yuan (US$157.3 billion) of loans, up 14 per cent over the same period last year, using up half of the target credit supply for the whole year.
The close relationship between breakneck investment growth and soaring bank loans is obvious. And given the absence of significant change either in the growth model of the national economy or the performance of domestic banks, it is reasonable to question the efficiency of funds involved in these investments and loans.
Actually, the State Council was already so alert to the situation that it outlined measures last Friday to avert a possible economic overheating by tightening controls on fixed assets investment and money supply.
Not that the 10.2 per cent growth of GDP, still mainly fuelled by an investment boom, should be a cause for caution. In retrospect, though on the fast side, the first quarter growth figure still falls in the range of the country's growth potential that averaged 9.6 in the past 27 years.
Yet when compared with the 7.5 per cent growth target for the 11th five-year period, a second look at the latest statistics is necessary. Progress in expanding the country's goods and services output should not blind us to the other key growth goals the economy has yet to meet.
Improvement of energy efficiency has been included as a top priority of the country's development strategy. And a 4 per cent reduction in energy intensity is this year's target.
But latest statistics do not show any progress on this aspect. Partly as a result of sizzling growth of fixed assets investment, the generation of electricity and output of coal have increased respectively 11.1 per cent and 12 per cent to outpace that of GDP. In other words, the country's consumption of energy for per unit GDP has not declined as expected, but increased.
Considering the current growth momentum, it would not be difficult for the country to reach its GDP growth goal this year.
Nevertheless, to make the beginning year not only a fast but a good start for the new Five-Year Plan, policy-makers need to come up with more aggressive actions quickly to lay a solid foundation for the realization of other critical development goals like the reduction of energy intensity.
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