TO THE POINT: The Chinese economy kept up its steady and fast growth in the first three quarters, the government has claimed. But small real estate developers will be suffering from cash flow problems when the government tightens control in this sector. To encourage imports, China is considering cutting taxes on the import and leasing of aircraft to bring the country into line with international standards. The fast food giant KFC will dump Nestle for Mengniu Dairy as its milk product supplier.

By LIU YUNYUN

Numbers of the Week 7.4867 yuan The Chinese currency yuan to U.S. dollar exchange rate broke to 7.4867 yuan against the U.S. dollar on October 25, the highest since the country has partially allowed its currency to float. 56% China's rural population shrank to 56 percent of the national total at the end of 2006, down 8 percentage points from what it stood at in 2001, the National Bureau of Statistics reported. China recorded a total population of 1.3 billion and the rural population has been shrinking each year due to the country's urbanization efforts.

National Economy

The national economy kept steady and fast growth in the first three quarters, featuring: rapid economic growth, an optimized structure, increased efficiency and improved livelihood of the people, according to the National Bureau of Statistics.

GDP

According to preliminary estimates, gross domestic product in the first three quarters of this year was 16.6 trillion yuan, a year-on-year increase of 11.5 percent, which was 0.7 percentage points higher than at this time last year. The first quarter growth was 11.1 percent, second quarter growth was 11.9 percent, and third quarter growth was 11.5 percent.

Industrial production

In the first three quarters, the total added value of industrial enterprises above the designated size was up 18.5 percent year on year (18.9 percent in September).

Among the 39 industrial divisions, the fastest growth was seen in petroleum processing, electrical machinery, iron and steel, transport equipment, electric power and building materials. Industries witnessing declines were the non-ferrous metal industry, processing of agriculture products and non-staple products, communication equipment, mining and processing of nonmetal ores, papermaking and extraction of petroleum.

Fixed asset investment

In the first three quarters, the fixed asset investment of China stood at 9.15 trillion yuan, up 25.7 percent, or a drop of 1.6 percentage points compared with the growth in the same period last year.

The investment in urban areas reached 7.82 trillion yuan, growing 26.4 percent, while that in rural areas was 1.33 trillion yuan, or up 21.2 percent.

CPI

In the first three quarters of this year, the year-on-year consumer price index (CPI) grew by 4.1 percent. CPI grew 6.2 percent in September, down 0.3 percentage points from August.

Foreign trade

The total value of imports and exports in the first three quarters of this year stood at $1.57 trillion, up 23.5 percent year on year, or 0.8 percentage points lower compared with the growth in the same period last year.

The value of exports was $878.2 billion, up 27.1 percent, while the value of imports was $692.6 billion, up 19.1 percent year on year.

FDI

The total value of paid-in foreign direct investment (FDI) stood at $47.2 billion, a year-on-year growth of 10.9 percent.

Forex reserves

At the end of September, China registered a total of $1.43 trillion in foreign exchange reserves, an increase of 45.1 percent year on year.

Money supply

By the end of September, the broad money (M2) supply was 39.3 trillion yuan, growing 18.5 percent. The narrow money (M1) was 14.3 trillion yuan, a year-on-year growth of 22.1 percent. Cash in circulation (M0) stood at 2.9 trillion yuan, up 13 percent.

KFC Dumps Nestle Dairy

They say there is no use crying over spilled milk, but in the case of Nestle, the old adage may not apply. In part of its effort to localize in China, Kentucky Fried Chicken (KFC) announced in Beijing that Inner Mongolia Mengniu Dairy Industry (Group) Co. Ltd. will replace Nestle as producers of its dairy products in KFC's 2,000-odd outlets in China.

According to this strategic alliance, Mengniu's dairy products will be sold at KFC starting next year, and milk will be the first Mengniu products available.

This year marks the 20th anniversary of KFC's entry into China. Its China operations contribute to around 20 percent of its sales