HONG KONG — Barely three years after joining the World Trade Organization, China has emerged as a major trading power, with total trade last year exceeding $1 trillion, an increase of more than 30 percent over 2003, making China the world’s third-largest trading power. This is an astonishing performance for a country that a quarter of a century ago was an insignificant player.
The economy as a whole was expected to have grown by 9.2 percent by the end of the year, with the projection for this year at about 8.5 percent, slightly slower but still extremely impressive.
The International Monetary Fund has predicted that average growth in 2005 will drop to 4.3 percent from 5 percent in 2004, but the Organization for Economic Cooperation and Development has predicted that the Chinese economy will grow 8 percent in 2005, a significantly higher rate. It said China remains competitive due to its stable exchange rate, flat unit labor costs and the removal of textile quotas in 2005.
The World Investment Report 2004 also said China has become one of the two engines for growth of the world economy.
According to Chong Quan, spokesman of the Ministry of Commerce, the exponential growth of trade has pulled along the rest of the Chinese economy. Foreign trade, investment and consumption, he said, are together the major forces pushing the economy.
While aware of the need to avoid overheating the economy, China’s leaders still want high-speed growth. Beijing has made it clear that it will seek to ensure comparatively fast economic development and stable prices through the use of macro-economic controls, such as those on loans and the use of land. Such measures have been taken over the past 10 months to avoid excessive investment in overheated sectors such as iron and steel and cement. Instead, investment is being diverted to agriculture, infrastructure and energy projects.
At an economic work conference in Beijing earlier last month, China’s leaders said prudent fiscal policy, stable economic growth with an emphasis on efficiency and preventing overheating were the top goals for 2005.
Foreign direct investment in China was expected to reach $60 billion last year, exceeding the $53.5 billion of 2003, according to the World Investment Report 2004, released by the United Nations Conference on Trade and Development. In 2003, China became the largest recipient of FDI, overtaking the United States, and was expected to retain that status last year.
James Morris, executive director of the United Nations World Food Program, said recently the Chinese government had achieved remarkable results in moving its people out of poverty. “Having lifted 300 million of its own people out of poverty in less than a generation,” Morris said at a press conference in Beijing, “China has made an unprecedented achievement in the last 25 years.”
The agency plans to phase out food assistance to China this year. In fact, the Chinese government has become a donor, having committed $20 million for WFP’s program in China and pledging $1.25 million for WFP operations elsewhere in the world in 2004.
In the coming year, one focus of the government will again be agriculture, with the emphasis on both increasing production and raising farmers’ income. Grain output last year was expected to reach 455 billion kg, reversing four years of falling yields. Farmer’s income in 2004 was put at 2,110 yuan ($255) in the first three quarters, up 11.4 percent year on year.
The Beijing conference set savings of energy and resources as important targets in 2005, to put an end to the current situation, which is characterized by high consumption of energy and resources, heavy pollution and low economic returns.
While the economy has soared in the last quarter century, it has also brought social problems in its wake. This includes high unemployment and internal migration as well as the aging of the population.
Currently there are 130 million people aged 60 or above, accounting for about 10 percent of the total population. And as families get smaller it is becoming increasingly difficult to expect younger people to take care of their elderly parents and grandparents.
Moreover, more than 70 percent of the country’s rivers and lakes are polluted, with water rendered unsafe to drink. “Currently 300 million Chinese people are drinking unsafe water, among which 190 million are drinking water with harmful substances above set standards,” Wang Shucheng, minister of water resources, said at a conference for directors of water resources bureaus.
He said the government hopes to ensure that all rural residents have safe drinking water by 2020.
By subscribing, you can help us get the story right.