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Economy Grows 7.3% in 2001, Uphill Battle Still Ahead. NBS announced Sunday evening in Beijing that China's GDP grew by 7.3 percent to reach 9.85 trillion yuan in 2001. However, China's economy also faces uphill battle. As the world economy heads into its deepest downturn in two decades, the Chinese government is preparing to overcome bigger difficulties and sustain steady economic growth next year. Healthy & Sustainable Economic Growth in 2001 Zhu Zhixin, director of the NBS, told a press conference that the domestic economy maintained a healthy and sustainable growth in 2001. Agriculture Preliminary figures showed that despite a reduction in grain acreage and severe natural disasters in some regions, the country' s grain output is expected to surpass 450 million tons this year and the yields of cotton and sugar will increase more than 10 percent. The output of meat and aquatic products also saw steady growth. In the same time, the acreage of quality wheat increased over 1. 3 million hectares, while quality rice accounted for more than 50 percent of the total grain acreage. Industry During January-November, industrial production surged 10 percent year-on-year, and the profits of industrial enterprises reached 406.9 billion yuan, up 7.4 percent over the same period of last year. The reform of state-owned enterprises (SOEs) has achieved progress this year, with 13 of the 14 key industries getting out of the red to make profits, Zhu said. China also further reduced redundant production capacity in such primary industries as coal mining, metallurgy, construction materials and power generation. In the same time, the hi-tech industry saw a fast growth this year. During January-November, the output of electronic and telecommunication products, such as microwave communication equipment, optical telecommunication equipment, mobile telephones and personal computers, registered growth rates ranging from 20 percent to 130 percent respectively. Figures showed that retail sales totaled 3.356 trillion yuan in the first 11 months of this year, up 10.1 percent. The growth rate was 0.3 percentage points faster than in the same period of last year. Consumer Price Meanwhile, the consumer price index (CPI) rose 0.8 percent nationwide over the same period of last year. The CPI in urban areas increased 0.8 percent, while the CPI in rural areas grew 0.9 percent. The prices of food, products and services for entertainment, education and culture, and housing jumped this year. The prices of primary products saw a slow rise, but the factory price of industrial products was 1.1 percent lower than last year. The prices for raw materials, fuel and energy went up 0.1 percent. Finance According to the NBS, the average disposable income per capita of urban residents grew 8.2 percent in real terms in 2001, 1.8 percentage points higher than last year, while the average net income per capita for rural residents increased 4.0 percent in real terms, 1.9 percentage points higher than last year. NBS figures indicated that bank savings of Chinese residents registered a remarkable increase. By the end of November, savings deposit totaled 7.23 trillion yuan, 801.9 billion yuan more than at the beginning of this year. China's Economy Faces Uphill Battle Government's Efforts As the world economy heads into its deepest downturn in two decades, the Chinese government is preparing to overcome bigger difficulties and sustain steady economic growth next year. Zhu Zhixin said China has worked hard to overcome the impact of the fast- changing and complicated international economic and political environment in a bid to maintain a healthy, sustainable economic growth this year. Export Markets & Foreign Trade As China's major export markets -- the U.S., Europe and Japan -- saw simultaneous downturns this year, the growth rate of exports shrank to about five percent from 27.8 percent last year, and the trade surplus decreased by more than US$3 billion. Minister of Foreign Trade and Economic Cooperation Shi Guangsheng said China will face an even worse international economic environment next year. He said China will do its best to maintain a net growth of exports in 2002. Domestic Investment & Consumption To offset the impact of decreasing overseas demand, the Chinese government adopted a stimulative policy of expanding investment and consumption. It issued 150 billion yuan-worth of treasury bonds for construction in 2001, pushing up the country's investment in fixed assets by 16.3 percent during the January- November period. Large-scale construction projects helped spur the production of steel, cement, glass, energy and transportation. As a result, China's industrial production increased 10 percent during the period. Fiscal Policy China will prolong its pro-active fiscal policy into the fifth straight year in 2002. Zeng Peiyan, minister in charge of the State Development Planning Commission (SDPC), said the construction of government-funded projects will start earlier than usual next year, so as to prop up the investment momentum that seemed to tail off in the fourth quarter of this year. A total of 510 billion yuan-worth of treasury bonds has been issued to fund fixed-assets investment over the past four years. Minister of Finance Xiang Huaicheng said the budget deficit will rise to a comparatively high level next year, as the government will continue to contract public debts. However, he said the debt burden is still within the international safety limit, and there will be no financial risks if the borrowed money can produce due returns. The treasury bonds have mainly been used to fund agricultural production, infrastructural construction, environmental protection and technical upgrading of state-owned enterprises. This has helped improve social productivity and increase government revenue. The fiscal revenue of the central government increased 23.1 percent year-on-year over the first 11 months of this year, tripling the growth rate of the economy. Dai Xianglong, president of the People's Bank of China, said the exchange rate of the Chinese currency, the RMB, remains stable, and that the central bank has no plan to lower interest rates. Through a set of policies to stimulate consumption and reform the financial sector, the Chinese government is steering the economy out of the shadow of deflation and maintained a low inflation rate. The State Economic and Trade Commission (SETC) estimates that the inflation rate was below 0.7 percent in 2001. Managing Director of the International Monetary Fund (IMF ) Horst Koehler said that at times of difficulty China made the right choice of continuing economic reform. Through three years of intensive reform of its state-owned enterprises, the country managed to promote profits of industrial enterprises by 7.4 percent in the first 11 months of this year. A number of new economic growth points are on the rise. During the January- November period, growth rates of the output of electronic and telecommunication products varied between 20 percent and 130 percent. Efforts to Meet WTO Challenges In face of intensified international competition following its accession to the World Trade Organization (WTO), the Chinese government decided not to relax its efforts for economic restructuring. According to an official forecast, the registered unemployment rate in cities will rise to 4.5 percent next year, from around four percent this year. Minister of Labor and Social Security Zhang Zuoji said that the government will liberalize the labor market and encourage the development of new industries, so as to create more job opportunities next year. Minister Zeng Peiyan said China will gradually open up the service sector to foreign investors, and begin to overhaul its administrative system of investment and financing next year. The government's comprehensive economic policies are expected to protect the Chinese economy from excessive fluctuations. The IMF has forecast that China's economy will grow by 6.8 percent in 2002, far above the world average of 2.4 percent. **** Improve Party Work Style, Push Higher Education Reform: Vice-Premier Chinese Vice-Premier Li Lanqing, also a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, urged that the work style of the CPC be improved and reform of the country's higher education sector promoted. Improve Party Work Style, Push Higher Education Reform: Vice-Premier Chinese Vice-Premier Li Lanqing, also a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, urged that the work style of the CPC be improved and reform of the country's higher education sector promoted. Li told a national work conference on Party building in colleges and universities here Saturday that it is essential to improve the Party's work style and carry out higher education reform under the guidance of the "Three Represent's" theory and the speech of President Jiang Zemin on July 1 this year. Improving the work style of the CPC committees in colleges and universities is a new requirement of the international situation and a new task of China's socialist modernization and the cause of opening-up and reform, Li said. Li asked colleges and universities to link Party building closely with practice, and to improve their style of work. The theoretical study of Marxism must be enforced in colleges and universities, which should also make efforts to improve students' practical abilities as well as academic standards. Moreover, the working, studying and living conditions of college students and teaching staff should be upgraded, he noted, with the focus on financial aid to poverty-stricken students. Cheating and corruption in colleges and universities must be eliminated, Li emphasized. Present at the meeting were Ding Guan'gen, head of the Publicity Department of the CPC Central Committee, Zeng Qinghong, head of the Organization Department of the CPC Central Committee, and the presidents of over 100 universities and colleges nationwide. **** Top Ten World News Events of 2001 by People's Daily and CRI. Following are top ten world news in the year of 2001 jointly selected by People's Daily and China Radio International (CRI). (Order by time) 1. OAU Transformed into AU The 37th summit of the Organization of African Unity (OAU) held in Lusaka, Zambia, on July 9-11 ratified the transformation of the 38-year-old OAU into the African Union (AU). The 53-member AU is expected to be more capable of resolving major political, economic and social issues faced by the African continent, and of coping with globalization. This was the last meeting of leaders from the OAU members, which marked the start of the one-year transitional period from the OAU to the AU. 2. Israeli-Palestinian Conflict Severely Escalates Since Israeli Prime Minister Ariel Sharon took office on March 7, his government has pursued a series of tough policies which have aroused intense resentment from the Palestinians. Some radical Palestinian military factions carried out bombing attacks at Israelis. In retaliation, Israel resorted to force by launching targeted killings, bombing Palestinian security offices, and invading Palestinian-ruled cities. The conflict has escalated to a situation unprecedented in the past decade. On December 3, the Israeli cabinet accused the Palestinian National Authority (PNA) led by Yasser Arafat as an entity supporting terrorism and then cut relations with Arafat. The Middle East peace process is currently going through a crucial period. 3. Remnants of Mir Space Station Splashes into the South Pacific Remnants of the Russian Mir space station plunged into the pre-set waters of the South Pacific at 14:00:12 (beijing time) between Australia and Chile, a zone that centers roughly around 44 degrees south latitude and 150 degrees west longitude. 4. Nepal's King, Queen Killed in Shooting at Royal Palace Nepal's crown prince opened fire in the royal palace, killing the king, queen, a prince and five others before shooting himself, a senior military official said. Crown Prince Dipendra, 30, opened fire and shot all the members of the royal family including King Birendra, Queen Aiswarya and Prince Nirajan, the official said. 5. Beijing <http://english.peopledaily.com.cn/data/province/beijing.html> Wins Right to Stage 2008 Olympics At the 112th session of the International Olympic Committee (IOC) held in Moscow on July 13, Beijing won the right to stage the 2008 Olympic Games in the second round of the ballot with 56 votes, defeating four other bidding cities, Osaka, Istanbul, Toronto and Paris. Five months after the bidding success, Beijing launched the Organizing Committee for the 29th Olympic Games on December 13. 6. September 11 Terror Attacks, Afghan Taliban Regime Collapses On September 11, two hijacked American airliners plowed into the twin towers of the World Trade Center in New York which collapsed successively, and one crashed into the Pentagon in Washington D.C. Relevant U.S. authorities announced that more than 3,200 people were killed or missing as a result of the terror attacks, and that the economic loss, direct or indirect, reached hundreds of billions of dollars. (Full Coverage) Maintaining that Saudi-born militant Osama bin Laden, then sheltered in Afghanistan and protected by the Taliban, masterminded the September 11 terror attacks, the U.S. government launched large-scale military strikes on Afghanistan as of October 7. Meanwhile, the Afghan Northern Alliance launched counteroffensive against the Taliban militia. The Taliban gave up resistance completely in early December. Representatives of four Afghan groups reached an agreement in Bonn, Germany, on December 5 to establish an interim administration. The interim government headed by Hamid Karzai was sworn in on December 22.(Full Coverage) 7. Successful APEC Summit Held in Shanghai On October 21-22, the ninth informal meeting of leaders from the 21 Asia Pacific Economic Cooperation (APEC) members was successfully held in Shanghai. Chinese President Jiang Zemin chaired the meeting, delivered an important speech and had meetings with leaders present at the conference. During the meeting, leaders of APEC members, focusing on "Meeting new challenges in the new century; Achieving common prosperity through participation and cooperation," had an in-depth exchange of views on the current world economic situation, human capacity building and future development of APEC, reached a broad consensus and issued a declaration and the Shanghai Accord. 8. China's Entry into WTO The legal document on China's accession to the World Trade Organization (WTO) was unanimously adopted on November 10 during the fourth WTO ministerial meeting in Doha, Qatar. On December 11, China officially became the 143rd full member of the organization. During the meeting, representatives of the 142 WTO members, after negotiations on the topics and objectives of a new round of trade talks, passed a ministerial declaration and agreed to start a new round of multilateral trade talks. 9. World Economic Slowdown Since the beginning of this year, a most serious economic slowdown in 20 years has occurred in most areas of the world. The U.S. economy started recession in March; affected by the U.S. economic fallout, the 15-member European Union underwent a sharp economic contraction; the Japanese economy experienced a further deterioration; the Asian economy, which was on recovery from the 1996 financial crisis, also slowed its pace of growth; and Latin American economy plunged into difficulty, with political disturbance breaking out in Argentina owing to the country's economic crisis at the end of the year. The September 11 attacks not only dealt a blow on the U.S. economy, but also severely affected the economies in other parts of the world. The International Monetary Fund estimated that the world economy would grow by only 2.4 percent this year, 2.3 percentage points lower than last year. 10. The United States Unilaterally Withdraws from the Anti-ballistic Missile Treaty U.S. President George W. Bush announced on December 13 the decision to withdraw from the 1972 Anti-ballistic Missile Treaty, which immediately met strong criticism from the international community. Russian President Vladimir Putin said that Bush's decision was "a mistake." Many other leaders and international analysts held that the withdrawal cleared the way for the United States to deploy the National Missile Defense System and further established the U.S. as the biggest nuclear power. However, it undermined the process of international disarmament and would lead to a new round of arms race. The U.S. withdrawal from the ABM also severely damages the foundation of international security and strategic stability, and will bring unexpected effect on the future world order. _________________________________________________ KOMINFORM P.O. 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