Soft landing marred by industrial losses
Growing losses in the industrial sector marred an otherwise positive picture of a soft landing in a review of last year presented by the State Statistical Bureau.
Total losses by industrial enterprises rose 11.1 per cent to 134.1 billion yuan (about HK$124.71 billion) and by the end of last year, value inventories were up 11.7 per cent to 592.1 billion yuan. State-owned enterprises' losses rose 8.2 per cent to 74.4 billion yuan.
However, the debt ratio of industrial enterprises fell fractionally to 64.9 per cent with the bureau claiming efficiency improved, the sales ratio of manufactured products rose and the net profits of state-owned enterprises climbed 11.9 per cent.
'The economic efficiency of industrial enterprises has recovered after two years of sliding,' bureau director-general Liu Hong said.
There was no large scale increase in bankruptcies which numbered 675 but mergers involving 1,022 companies was described by the report as a breakthrough.
The review said fixed-asset investment grew 8.8 per cent and the mix improved with a shift towards basic industries and infrastructure with jumps in investment, energy, transportation and telecommunications. These will help alleviate bottlenecks in the economy.
On a geographical basis, poorer areas to the west barely increased their share of the cake, getting a mere 1 per cent, despite government policies to channel resources away from coastal areas.
Trade continued to be an engine of growth in better-off areas, reaching US$325 billion, up 12.1 per cent, exports rose 20.9 per cent to $182.7 billion, producing a trade surplus of $40.3 billion.
Direct foreign investment rose 8.5 per cent to $45.3 billion and the total amount of foreign capital including loans used rose 15.7 per cent to $64 billion.
Last year continued to see big rises in savings with deposits increasing faster than per capita growth in incomes. Savings by urban and rural residents supposedly went up 19.3 per cent to reach 4.62 billion yuan out of total deposits of 8.23 billion yuan.
However, urban residents enjoyed a real increase in average incomes of only 3.4 per cent to 5,160 yuan while rural dwellers saw their incomes rise by 4.6 per cent.
Insurance premiums registered a 40 per cent jump to 109 billion yuan.
Bank lending kept pace with deposits with loans reaching 7.49 billion yuan, a rise of 16.7 per cent. Most of this was in the form of short-term loans.
The review also found that while GDP growth was 8.8 per cent, retail prices rose by a mere 0.8 per cent and consumer prices by just 2.8 per cent, the money supply continued to expand at a fast rate. M1 money supply rose 15.6 per cent and M2 rose 17.3 per cent to 9.099 trillion yuan.
Low inflation was helped by the second-highest grain harvest on record and an increase in cotton production.
RECOVERY Rise in mergers a breakthrough Trade still an engine of growth Foreign investment at US$45.3b in 1997