of the Yangtse Delta Region in 2003
Shanghai Flash N° 1/2004 pdf-version
2003 was a
turbulent year for China. SARS as well as droughts and floods
disturbed the economic development severely, so that the growth
rate in the second quarter fell to 6.5%, mainly due to the effect
of SARS. Nevertheless, China' s economy enjoyed a faster growth
in the year as a whole. The Yangtse delta region - including in
this term the city of Shanghai and the two provinces of Jiangsu
and Zhejiang - continues to play a locomotive role in the country'
s economy, particularly in the fields of investment and foreign
s GDP reached 11, 669.4 billion RMB (1,411.1 billion US$),
an increase of 9.1% in 2003, 1.1 percentage points more than in
2002. The GDP per capita topped US$1,000 in 2003 for the first
time in the history.
same period of time, the aggregate GDP of the delta region
climbed to 2' 790.3 billion RMB (337.4 billion US$), accounting
for 23,9% (22,1% in 2001) of China' s total GDP, a remarkable
result compared to its rather low percentages of population (10.9%)
and area (2.2%). Due to the rapid increase of exports and investment
in fixed assets, Shanghai, Jiangsu and Zhejiang have all won their
highest growth rates in recent years.
reported a GDP of 625.08 billion RMB (75.58 billion US$) in 2003,
an increase of 11.8% (10.9% for 2002) over the previous year.
This was the highest growth rate since 1998 and the twelfth consecutive
double digit growth rate. Jiangsu Province, the second
largest provincial economy in China after Guangdong province,
recorded a GDP of 1245.18 billion RMB (150.57 billion US$), up
13.5%, 4.4 percentage points higher than the national average.
The GDP of Zhejiang province reached 920 billion RMB (111.25
billion US$), up 14% (12.3% for 2002). Measured by per capita
GDP (19,730 RMB or 2,385 US$ in 2003), Zhejiang is the richest
province in China.
Consumption: Stagnant due to SARS
by SARS, the country's private consumption was stagnant, reflected
in the situation of the retail sales in the first half of 2003.
China' s total retail sales growth went down to 8% in
the first half of 2003 from 8.8% in 2002 and from 10.1% in
2001. In the same period, the retail sales growth rate in Shanghai
went down to 8.8% after having reached 9.3% in 2002; in Jiangsu
it was just up to 12.7% (compared with 12.1% for the whole of
2002) and in Zhejiang it went down rapidly from 12.6% for
2002 to 8.6% in 2003.
showed its strongest effect in the service sector, many kinds
of key consumer articles, however, like personal computers, mobile
phones, and even cars and houses, still sold well due to an upgrading
of the consumption structure in accordance with a steady and fast
increase of personal disposable incomes in recent years. Sales
of sedan cars in China surged 75.3% in 2003 compared to 2002 and
reached 1.97 million units.
as a whole, however, China' s retail sales totalled
4,584.2 billion RMB, up 9.1% (compared with 8.8% in 2002) from
the previous year; in Shanghai retail sales reached 222.06
billion RMB, up 9.1% (up 9.3% in 2002); in Jiangsu the
sales recorded 356.65 billion RMB, up 13.7% (up 12.1% in 2002)
and in Zhejiang they were 315.7 billion RMB, up 10.9% (up
12.6% in 2002).
in Fixed Assets: One of the Main Engines of Growth
Chinese economic growth has been strongly driven by a pro-active
fiscal policy, featuring heavily on increased investments in fixed
assets, especially in the field of infrastructure. This situation
continued in 2002 and in 2003 in particular, since all of local
legislative and government organs were re-elected earlier this
year and many officials tended to show their ambition in their
economic plans further.
511.8 billion RMB (about 666.5 billion US$), enacted investments
in fixed assets for the whole of China grew at an extraordinary
rate of 26.7% in 2003 over the same period of the previous year,
recording the fastest growth since 1994.
In the delta
region, investments in fixed assets accelerated in 2003 as well:
in Shanghai, they reached 245.21 billion RMB (corresponding
to 29.65 billion US$), a rise of 12.1% (up 8.2% in 2002); in Jiangsu
they totalled 533.58 billion RMB (64.52 billion US$), a rise of
38.6% (up 16.5% in 2002) and they recorded 494.70 billion RMB
(59.82 billion US$) in Zhejiang, an increase of 38.1% over
the previous year (up 24.9% in 2002).
Investment: Massive Influx Continued
become one of the most preferred destinations for foreign direct
investments in recent years. Contracted foreign direct investment
(FDI) in China increased 39% to 115.07 billion US$ in 2003
over the same period of 2002, while actually utilized FDI stagnated
at 53.51 billion US$, up only 1.4% reflecting the negative impact
of SARS to China's economy and the stronger international competition
for attracting FDI.
are moving more and more of their manufacturing bases from Southeast
Asia to China. By the end of 2003, there were more than 465' 277
foreign invested enterprises in China, with contracted foreign
investment of 943.13 billion US$ and actual foreign investment
of 501.47 billion US$. It is important to realize, however, that
more than 60% of the capital under the heading of FDI is still
coming from ethnically Chinese sources. For accumulated investment
the amount is still higher than 75% of the total sum.
delta region saw an accelerating influx of foreign investment
since 2001. The total FDI of the region was about 27.1 billion
US$ in 2003 (18.56 billion US$ in 2002) in terms of actually utilised
value, accounting for 51% (up 35% in 2002 and 30% in 2001) of
China' s total. Actually utilised FDI in Shanghai was 5.85
billion US$ (5.03 billion US$ in 2002), an increase of 30.1 %
over the previous year (up 14.5% 2002). In Zhejiang it
amounted to 5.45 billion US$ (3.16 billion US$ in 2002), an increase
of 72.4% (up 43% in 2002), and in Jiangsu it reached 15.80
billion US$ (10.37 billion US$ in 2002), an increase of 52.4%
(75.4% in 2002). Jiangsu therefore became the most preferred province
for FDI, surpassing Guangdong province for the first time in terms
of both contracted and actually utilized FDI.
investment is also increasing in China and in the delta region
as well. By the end of 2003, there were 613 Swiss-invested projects
in China with a total accumulated value of 2,780 million US$ in
terms of contracted investment. Among them, a majority of 64%
concentrated in the Yangtse delta region. In Shanghai, Swiss direct
investment totalled 1,306 million US$ in terms of contractual
value for 138 projects, while in Jiangsu and Zhejiang it was 405
million US$ for 86 projects and 26 million US$ for 7 projects
respectively (See Table 2).
Trade: Another Motor of Growth
show that China's total foreign trade volume increased
by 37.1% on a year-to-year base to 851.2 billion US$ in 2003 (in
2002: 620.8 billion US$, up 21.8%). Exports rose 34.6%
(22.3% in 2002) to 438.37 billion US$ (325.57 billion USD in 2002);
imports grew more rapidly by 39.9% (21.2% in 2002) to 412.84
billion US$ (295.22 billion USD in 2002); the trade surplus stood
at 25.53 billion US$ (30.35 billion US$ in of 2002). Low prices
and reasonable quality gave China's products an edge in the world
markets. China has considerably benefited from a weak U.S. dollar
as the RMB is virtually pegged to the US currency. On the other
hand, China's economic boom, the rising demand by foreign-funded
enterprises and by private firms as well as the reduced import
tariffs and licences as a result of China' s entry to the WTO
have spurred imports.
region held a leading position in China' s foreign trade.
The export value of Shanghai was 48.48 billion US$ in 2003
(32.06 billion US$ in 2002), an increase of 51.2% (16% in 2002)
compared to the previous year. Jiangsu exported goods in the value
of 59.14 billion US$ (38.48 billion US$ in 2002), an increase
of 53.7% (33.3% in 2002) and Zhejiang' s exports grew 41.5% (28%
in 2002) to reach an amount of 41.6 billion US$ (29.42 billion
US$ in 2002). The region's total export value reached 149.22 billion
US$ (100 billion USD in 2002), accounting for about 34% (31% in
2002) of China' s total export value.
in the Yangtse delta region increased even faster than exports
in 2003. During the year, Shanghai imported goods with a value
of 63.92 billion US$ (40.61 billion US$ in 2002), an increase
of 57.4% (22.1% in 2002) over the previous year. Jiangsu imported
54.53 billion US$ (31.82 billion US$ in 2002), an increase of
71.3% (41.6% in 2002) and Zhejiang' s imports grew 58.9% (27.7%
in 2002) to reach an amount of 19.8 billion US$ (12.54 billion
US$ in 2002). The region's total import value reached 138.25 billion
US$ (85 billion US$ in 2002), accounting for 33.5% (29% in 2002)
of China' s total imports.
balance of Shanghai therefore showed a deficit of 15.44
billion US$ in 2003 (a deficit of 8.55 billion US$ in 2002), reflecting
the city' s increasing demand for foreign goods in the high-tech
and higher quality brackets due to internationalisation in the
field of consumer goods. This demand itself was mainly due to
a fast and steady increase in personal incomes and to a growing
import demand for foreign-funded enterprises as well. Jiangsu
reduced her trade surplus to 4.61 billion US$ from 6.66 billion
US$ in 2002) and Zhejiang remained the most aggressive
trading province in China with a trade surplus of 21.8 billion
US$, accounting for 85% (56% in 2002) of China' s total trade
relation with the Yangtze-delta region developed also rapidly
last year. As Table 2 shows, the delta region imported goods with
a total value of 964 million US$ from Switzerland, an increase
of 51% in 2003 over the previous year, and exported a total value
of 302 million US$ to Switzerland, an increase of 40%. Shanghai,
Jiangsu and Zhejiang imported 550 million US$ (an increase of
44%), 253 million US$ (an increase of 53%) and 143 million US$
(an increase of 80%) respectively from Switzerland. The export
of Shanghai, Jiangsu and Zhejiang to Switzerland were respectively
90 million US$ (an increase of 33%), 111 million US$ (an increase
of 64%) and 97 million US$ (an increase of 29%; remark: all these
figures do not include the indirect trade via Hong Kong.)
Challenges: Old and New
situation in China will remain dynamic in the near future. According
to Chinese Premier Wen Jiabao in his recent report to the Second
Session of the 10th National People's Congress, the top legislature,
the target growth rate of China's GDP is set by the government
at 7% for 2004. The target is set for a "stable and rapid
economic growth without drastic fluctuations" and has given
ground for discussions in economic circles. The estimation made
by the main Chinese research institutes are mostly higher than
8.5 %. Another double-digit increase for the delta region provinces
remains very likely for the current year again.
But the challenges
are there as well. The Chinese government is facing not only a
sluggish world economy and an uncertain global political situation,
reducing demand from abroad, but also a deflationary pressure
in the home market marked by slower growth of private consumption
and by a considerable overproduction in many fields. High unemployment
rates and a stagnant rural income growth will very likely continue
to challenge government policies. Hidden unemployment in the countryside
in particular could not be corrected by twenty-five years of development.
Population increase has kept the rural population roughly at the
same level as in 1980. Migration into urban areas has thus just
helped to increase problems in these growth centres, it did not
allow for an alleviation of the rural employment situation.
serious problem remains therefore the high unemployment
pressure in urban and in rural areas. According to official
statistics, the number of unemployed people registered in the
urban areas totalled 8 million by the end of 2003. The unemployment
rate in terms of this kind climbed to 4.3% by the end of 2003,
up 0.3 percentage points over the previous year. But these figures
do not include the "laid-off workers" (about 14 million
people) and the floating population (estimated at 100 million,
concentrated in big cities like Beijing, Shanghai and Shenzhen,
mainly composed of jobless rural laborers). The central government
has vowed to keep its registered unemployment rate below 4.7%
this year and to create more than 9 million new jobs. This is
obviously not enough for urban job-seekers, who stand this year
at about 25 million, including around 10 million school and college
graduates who will have difficulties to find their first job.
s registered unemployment rate was 4.9% at the end of 2003, as
reported by the Shanghai Labor and Social Security Bureau, with
a registered figure of 301,000 persons unemployed (more 13,200
than that by the end of 2002). In Jiangsu it was 4.1% (a drop
of 0.1 percentage point, compared with that by the end of 2002
) and in Zhejiang 4.2%, at the same level of the previous year.
Again, these statistics do not include the "laid-off workers"
and the migrant population, totalling about 3.7 million out of
the 17 million people in Shanghai.
problem is the growing income gap, not only between urban
and rural residents, but also among urban households as well.
A survey conducted by a Beijing-based research institute showed
that the average per capita income of urban residents was 3.1
times that of rural residents in 2002 (2.8 times in 1995). The
real disparity between urban and rural people is even wider if
the additional social welfare of urban citizens, such as medical
care, unemployment insurance and minimum living relief, to which
most rural people cannot access, are taken into account. Urban
households' annual disposable income per capita reached 8,472
RMB (1,020.7 US$) in 2003, a real increase of 9% over the previous
year, while the per capita net income of China's rural people
was only 2,622 RMB (317.0 US$) in 2003, an actual increase of
In 2002, according
to the survey, the top 1% of persons with the highest incomes
earned 6.1% of the total income of the society; the top 5% of
persons with the highest income had nearly 20% of the total income
of the society; and the top 10% of persons with the highest income
earned 32% of the total income of the Chinese society.
wealthy people in China include private entrepreneurs and entertainment
stars, then comes the group of top managers of State-owned enterprises
in the process of economic reform and industrial restructuring,
while the underprivileged group consists of jobless and laid-off
urbanites as well as poor farmers (about 28 million people), mostly
in the backward western areas of China.
problem are inflationary pressures. Money supply registered
a rapid increase once again. By the end of 2003, the broad money
supply (M2) was 22,122.3 billion RMB (2,665.34 billion US$), up
19.6% (2.8 percentage points higher) over the same period of previous
year; narrow money supply (M1) was 8,411.9 billion RMB (1,013.48
billion US$) at the same time, up 18.7% (1.9 percentage points
higher). Cash in circulation (M0) amounted to 1,974.6 billion
RMB (237.90 billion US$), up 14.3% (4.2 percentage points higher).
rapid economic growth, particularly investments, China's consumer
price index, the key barometer for inflation, rose 3.2% on a year-to-year
base in December 2003 and January in 2004 - the strongest rise
since April 1997. According to a report by the Chinese central
bank, it will grow by 3% this year, compared to 1.2% in 2003.
The ex-factory price of China's industrial products, an indicator
of consumer price trends, rose 3.5% in January 2004 on a year-to-year
base, compared to the 1.9% growth in November and 1.2% in October.
Steel, aluminum and other raw material prices rose about 30% recently.
Current Economic Indicators* of the Swiss Consular Area
Retail Sales of
(during the period)
* All statistics not including Taiwan, Hong Kong and Macao.
Current Economic Indicators* of the Swiss Consular Area
by end of 2003
by end of 2003
by end of 2003
Note: in million USD
General of Switzerland
for business related matters, please reply: email@example.com