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To: Ibexx who wrote (116680)	4/15/2002 11:45:38 PM
From: Ibexx	Read Replies (1) \| Respond to of 152472

04/15 23:33 China GDP Growth Accelerates; Budget Surplus Shrinks (Update1) By Michael Forsythe Beijing, April 16 (Bloomberg) -- China's economic growth accelerated more than expected in the first quarter, helped by government spending that cut the budget surplus by two-thirds, Finance Minister Xiang Huaicheng said. Gross domestic product expanded 7.6 percent from a year earlier, topping the fourth quarter's 6.6 percent and the 7.5 percent increase economists expected and snapping a three-quarter slowdown. The budget surplus for the quarter shrank 65 percent to 29.7 billion yuan ($3.59 billion), Xiang said. ``China will definitely maintain a 7 percent growth rate this year,'' Xiang told a press conference. Still, he said, ``the fiscal situation in the first quarter was rather grim'' and the government may need to cut spending to cap a growing budget deficit. Asia's second-largest economy is counting on state spending to meet its 7 percent growth target this year as rising unemployment damps consumer demand. Xiang said last month the deficit will probably swell by a fifth this year to a record 309.8 billion yuan as the government pumps more money into public-works projects and welfare benefits. State spending is buffering the domestic economy as entry to the World Trade Organization prompts state companies to shed hundreds of thousands of workers to compete with foreign rivals, causing China's 1.3 billion consumers to spend rather than save. PetroChina Co., China's biggest oil producer, said yesterday it plans to cut as many as 4,000 jobs this year. The company and its parent have fired more than 100,000 workers since 1998. The government has said the official urban jobless rate may rise to 4.5 percent this year from 3.6 percent at the end of 2001, and economists put the real rate as much as four times higher. Flagging Demand The government plans to sell 150 billion yuan in special bonds this year to fund dams, railroads and other projects aimed at crating jobs and boosting domestic demand, and Premier Zhu Rongji also pledged last month to pump more money into unemployment benefits and wage increases. Even so, there are signs spending is flagging. Household savings rose to a record last quarter, and consumer prices haven't increased in four months. Konka Group, China's second-largest television maker, last week reported its first loss in eight years for 2001 as a product glut and price wars eroded profit margins. Government spending gained 23.9 percent last quarter from a year earlier to 351.1 billion yuan, and revenue rose 3.4 percent to 380.8 billion yuan, Xiang said. Falling tariffs following WTO entry, along with tax refunds, capped revenue growth. While Xiang said China will probably meet its deficit target this year, it may have to rein in a five-year-old state spending drive to plug the gap in coming years. ``The proactive fiscal policy will ultimately fade out,'' he said. ©2002 Bloomberg L.P. All rights reserved. Terms of Service, Privacy Policy and Trademarks. Ibexx PS: Oh yes - this bodes well for China Unicom/QCOM