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First-Quarter Economic Upturn
Special> First-Quarter Economic Upturn
UPDATED: April 28, 2009 NO. 17 APR. 30, 2009
The First Step to Recovery
The worst of times may have passed with better-than- expected economic results in the first quarter

The National Bureau of Statistics (NBS) published the economic performance figures for the first quarter of this year on April 16. The figures indicated that the country's GDP grew 6.1 percent year on year to 6.57 trillion yuan ($960 billion).

"Although the growth rate was 4.5 percentage points lower than the year-earlier period, the overall economic performance was better than expected," said Li Xiaochao, the NBS spokesman, at a press conference on April 16. Economists and scholars previously predicted the first-quarter growth would be about 5-6 percent.

The NBS figures indicated that real economic indicators had started to rebound after four months of consecutive decline since November.

Power generation and transportation are among the main gauges that indicate where the economy is heading. In March, the country generated a total of 287 billion kwh of electricity, a 0.71-percent drop from the same month last year.

In March, daily electricity generation on average rose 10 percent compared with that of January and February. In some economically developed provinces, month-on-month power generation grew steadily in March, by about 30 percent in Zhejiang, 26 percent in Guangdong, 20 percent in Jiangsu, and 13.8 percent in Shanghai.

In terms of transportation, daily railway cargo edged toward its highest level ever in March. Port cargo started to rebound, and the number of air travelers rose substantially.

In addition, economic data indicated signs of recoveries in various industries. The industrial added value of enterprises with annual sales revenue of more than 5 million yuan ($732,064) began to pick up month on month, growing 3.8 percent year on year in the first two months, while jumping 8.3 percent in March. The 8.3-percent growth was the same as that of last October, which indicated that industrial output had rebounded.

In the first quarter of this year, China's auto output and sales grew 1.91 percent and 3.88 percent, respectively, while in the last two quarters in 2008, the rate fell into negative territory. Meanwhile, home sales picked up momentum.

Mainland stock market performance also hinted that the economy might have picked up momentum. The benchmark Shanghai Composite Index surged more than 30 percent so far this year, reaching the same level it was at last September when the global financial crisis hit.

In the first quarter, the entrepreneur confidence index stood at 101.1, about 6.5 points higher than that of the last quarter of 2008.

Sign of the times

All the figures indicate that China's economy has started to warm up. NBS spokesman Li Xiaochao described this turn of events with a poetic introduction to his presentation at the April 16 press conference and said, "In spite of all the volatility, spring has arrived anyway."

Premier Wen Jiabao presided over a State Council meeting on April 15 to analyze the first-quarter economic performance. The meeting acknowledged the stimulus package promulgated last November had generated some positive effects, and that economic performance was better than expected. He said that six factors indicated a "better-than-expected" economy. First, there was accelerated investment growth, rising consumption and domestic demand; second, industrial production that had gradually stabilized, while agricultural production grew steadily; third, structural readjustment had been actively carried out with coordinated regional development; fourth, the banking system had ample liquidity with steady financial market operations; fifth, urban employment increased with growing income; and sixth, confidence was regained with improved market expectations.

Before the introduction of the first-quarter data, government officials and economists had considered whether a second round of stimulus packages was necessary. Judging by the messages that the State Council conference sent, current economic development did not need a new stimulus plan as long as the November stimulus measures were all put in place.

But the foundations for the country's economic recovery are not yet solid, and the global financial crisis is deepening—both of which are exerting tremendous pressure on China's economy. The State Council meeting iterated the importance of adhering to a positive fiscal policy and appropriately accommodative monetary policy and carrying out the stimulus package forcefully.

The State Council also said the government would immediately launch the third batch of central investment to expand domestic consumption, further optimize the effect of home appliances sales in the countryside, expand the purchase of services in the fields of culture, tourism and information, and stabilize home and auto sales. The State Council emphasized that charges and regulations that violated consumer interests would be eliminated.

Exports must be stabilized at any cost, the State Council said. Policies that restrained exports must be wiped out. Favorable policies for farmers must be put into force to guarantee agriculture production. All types of work that improve people's livelihoods should be strengthened. The employment situation should be improved, and social security should be perfected. Key industry revitalization must be carried out in an orderly and timely fashion, while coordinated measures must be promulgated and put in place as soon as possible.

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