As the first year of the new century and the 10th five-year plan, 2001 brought success and happiness to China. Meanwhile, the awful 9-11 terrorist attack threw the US economysintosturmoil and the Euro has been sluggish. The global economy grew only 1.09% in 2001, contrasting with China's 4.7% growth rate (FM) .

　　Global capital flow plunged from US,000 billion (6,000,000,000,000) last year to US billion (700,000,000,000). Many countries can hardly maintain a growth rate of 3%, such as Indonesia, Malaysia, The Philippines and Thailand. In contrast, China's economy has been stable and growing at a 7% rate.

　　Some have claimed that past data on the Chinese economy was not accurate. For instance, the World Bank suspected that China's GDP figures from two years ago were undervalued. But last year they worked together with us, participating in the whole process, from the collection of data to the general report. Recently the Director General of the Research Institute of East Asia acknowledged the precision of China's economic data after detailed comparison on a variety of aspects. And Dr. Stephen Roach, a leading global analyst, also came to trust China's economic statistics after my detailed introduction.

　　Adjustment of China's Macroeconomic Policy

　　As we all know, after the outbreak of the Asian financial crisis in 1997, China put an active financial policy on track to expand domestic demand. China's bank rate has dropped to 2.25% from 10.56% in 1996 and taking interest taxsintosaccount, the actual rate is a mere 1.89%. In contrast, the US did not drop its bank rate until recession loomed in April of last year.

　　On the other hand, China issued more public debt and applied RMB 460 billion (460,000,000,000) to infrastructure projects, including RMB 50 billion for development in western China. Combined with local investment, a total of RMB 2,000 billion (2,000,000,000,000) was putsintosinvestment. The expressway length in China has been extended to 20,000 km from only 1,000 km in four years, second only to the US.

　　Besides investment, China also increased the salaries of civil servants and low-income groups by 30% and boosted consumptive ability and income anticipation. This led directly to an investment growth rate of 16.3% and a consumption growth rate of 10.1%.

　　Macroeconomic reform has continued unabated in these years and breakthroughs have been made in crucial fields such as the reform of ownership, the booming of the non-state owned economy, and so on. Last year's GDP hit RMB 8,940.4 billion (8,940,400,000,000), made up of contributions by the state-owned economy, the private economy and the mixed economy. This kind of triangular economic structure is steadier than the bi-angular one, bringing state-owned economy increased vigor and moving the private economy ahead.

　　More than US billion flewsintosChina in 2001, up 15.6% from last year. The growing economy of China alleviated the damage caused by the 9-11 terrorist attack. It was unexpected that the attack could damage the world economy so much, and as a result the external deterioration plunged China's export growth rate to 6% from 27.8% last year.

　　As we look back at last year's economy, we also see some problems. Firstly, farmers?incomes grew at a relatively slow rate of 2.1%. On the basis of the present situation, we estimate this year's growth rate must be higher than last year's. We believe this because agricultural product prices are increasing; the number of farmers who go to work in cities is growing; and basic construction is attracting more and more farmers.

　　However, this rate is still low compared to the growth rate of urban residents?income. For example, during the previous 9 months, the average urban residents?income has grown at a rate of 7.4%, whereas the farmers?incomes have grown at 5.2%. But the government is still increasing investment in urban areas, so the difference must be greater. But that is not the point. The point is that for a long time Chinese farmers'incomes have been low and agricultural production has not been effective enough, which leads to the poor consumptive ability of rural residents. According to my estimates, the present farmers'income and consumption level is equal to urban residents?income and consumption level 15 years ago. Therefore, the problem that farmers "cannot afford it"is a continuing problem.

　　Secondly, the integrated arrangements of social resources are not efficient enough. This shows in the repeated construction and improper resource arrangements.

　　Thirdly, while nongovernmental investment is recovered, it is still lower than the average nationwide investment standard.

　　Fourthly, the market needs standardization .

　　The above is my review of last year's economic work, which has problems but no mistakes.

　　For the future we'd like to make predictions as follows.

　　The Chinese economy is influenced both by economic psychology and external environments. There are many uncertain factors in the external environment. For the economic recession of the US, Japan and Europe, a pessimistic opinion is looming which says this recession will spread worldwide. The optimistic opinion, however, is that the bad situation will be healed in the second half of next year.

　　However, from the general point of view, there are two advantages for China. At first, the depressed economy after 9.11 increased the coordination among the big countries because US and Europe can't stand watching this time as they did during the 97 economic crisis. At the same time because of China's stable economic situation, foreign investment in China should increase. Second, China's internal factors such as financial and currency policies as well as domestic demand expansion will see effects step by step. On the other side, policies will continue to be adjusted as well.

　　China's present general economic environment is comparatively loose and comfortable. China's basic construction management is also well-off. The relaxed investment environment will keep the investment at a high level. Therefore, economic growth and consumption won't slow down. If the situation depends only on the internal elements, the economic growth rate won't be less than 7%.

　　However, the key point is external factors. Hence, all we should do is to keep the advantageous internal factors and then increase exports.

　　By all means we have noticed that economic development depends not only on the government's power but also on the peoples?power. Up to this point nongovernmental investment capital has already exceeded RMB 10,000 billion (10,000,000,000,000), which has been a strong factor in boosting economic development. If we can take full advantage of these kinds of investment resources, our economy will keep growing over the long term.

　　In total, we foresee that China will become a full modernized country by the middle of this century.