2005 China Regional Financial Operations Report

Author: Monetary Policy Analysis Group of the People's Bank of China
Publisher:
Publish Date: 2006-07-01
Features: In 2005, all regions of the country earnestly implemented the overall requirements of the Party Central Committee and the State Council on strengthening and improving macro-control, established and implemented the concept of scientific development, actively promoted economic restructuring and the transformation of economic growth models, and improved the coordination of regional economic development. Consumption demand in various regions grew steadily, and the rural consumer market began to pick up. In the eastern regions, the growth rate of fixed asset investment slowed down, while the growth rate in the western and northeastern regions accelerated. The growth rate of import and export in the eastern regions declined significantly, with a larger decline in imports than exports, leading to an increase in trade surplus or a decrease in trade deficit. The central, western, and northeastern regions strengthened efforts to attract foreign investment, becoming new hotspots for foreign capital entry; the growth rate of fiscal expenditures also accelerated, which had a certain promotional effect on economic growth, but it was necessary to reasonably define the scope of government investment. It is essential to actively promote the transformation of government functions in line with the requirements of the 11th Five-Year Plan, strengthen social management and public service functions, and further optimize industrial structure in all regions. Major grain-producing areas focused on improving agricultural comprehensive production capacity, with agricultural added value exceeding 100 billion yuan in eight provinces including Shandong, Henan, and Sichuan. The Yangtze River Delta, the Yangtze River Delta, and the Beijing-Tianjin-Hebei economic circle accelerated the upgrading of industrial structure. The equipment manufacturing industry in the old industrial base of the northeast initially demonstrated its advantages, while the oil and power industries in central and western regions developed rapidly. The service industry in all regions developed steadily, and its proportion in the national economy further increased. The overall trend of price increases in various regions showed a downward trend, with the consumer price index remaining low, but the price increases of energy and raw materials remained high. The price increases in central, western, and northeastern regions were significantly higher than those in the eastern regions. Labor costs tended to rise, with the average wage of employees increasing by 14% in 2005, and the highest growth rates concentrated in central and western regions, although the eastern regions had the highest average growth rate. The overall growth rate of real estate prices remained stable. Under the influence of national real estate control policies, the growth rate of prices in major cities in the Yangtze River Delta and the Pearl River Delta slowed down significantly, with the sales price of newly built housing in Shanghai showing negative growth. However, due to various factors such as consumption upgrading, urbanization, rising land supply costs, and the expectation of the appreciation of the RMB, the real estate markets in major cities such as Beijing and Shenzhen began to heat up, and some coastal areas with relatively developed economies, non-provincial capital cities, and some small and medium-sized cities showed a significant upward trend in real estate prices. In 2005, the banking, securities, and insurance businesses in all regions of the country grew rapidly, and financial operations remained stable. All regions attached great importance to the construction of the financial ecological environment, with the proportion of direct financing increasing to varying degrees, and the financing structure improving. Although financial assets were mainly concentrated in the eastern regions, capital began to flow more to central and western regions. Deposits in all regions grew at a relatively fast pace, with savings growing faster in the western regions, and the proportion of corporate deposits in the eastern regions was significantly higher than in other regions. Loans continued to grow steadily, with the growth rate of loans in most regions ranging between 10% and 13.5%. Under the guidance of national industrial structure policies, the rapid growth of medium- and long-term loans in various regions was restrained, with the growth rate of medium- and long-term loans declining in 27 provinces and cities. Bill business developed rapidly in all regions, with the interest rates in the bill market showing a downward trend. In some provinces, the newly added amount of bill financing accounted for more than 30% of the newly added amount of RMB loans. While maintaining relatively rapid economic growth, many regions in China issues such as excessively rapid growth in fixed asset investment, prominent structural contradictions in foreign trade, slow transformation of economic growth models, and low degree of specialization and cooperation between regions. Some areas also faced problems such as excessive consumption of energy and resources and exacerbated environmental pollution. In 2006, all regions should continue to follow the unified deployment of the Party Central Committee and the State Council, fully implement the concept of scientific development, continue to promote economic restructuring and the transformation of economic growth models, build a resource-saving and environmentally friendly society, and vigorously promote coordinated regional development.