Yao Jingyuan:auto provide impetus to China

Fourth, there still has been a great pressure in our job market. The chairman and I have both mentioned several times about what is the contribution of our auto industry? It not only produces cars, but offers many job positions as well. No matter hiring people directly or indirectly, it does make a good contribution. The pressure in our labor market is the biggest as compared to other countries in the world. There is a concept adopted by UN in demographic statistics called Working Age Population, by that it means the group of working labor aged between 16 and 65. The working age group in China has reached 909 million in 2004, which is 300 million more than the total amount of population in the developed countries of US, Japan, Germany, France, Italy, and Canada. Although we have actively taken some great measures dealing with this problem since the second half of last year, which is proven to be effective, yet, it's still facing a tough condition.

The current difficulties like Chief Chen just mentioned, has been the toughest ever in the past period. In order to tackle with them our Party Central Committee and State Department has made some effective measures and a package of strategies timely. To better understand the condition of our current economy, we should know 3 facts listed below:

First, the downward movement of our economy starting in the second half of last year has been over.

Second, our entire national economy sees the signs of stable recovery.

Third, instead of being blindly optimistic about these not easy-coming accomplishment, we should realize the foundation of recovery is not stable enough and the economic pattern is still imbalance. There has been great uncertainty in our country.

Why I am so sure to say our economy's downward trend is over and on the track of recovery is based on two aspects, one is from production perspective to analyze the Three Major Industry, which is primary industry, secondary industry and tertiary industry.

First, the primary industry. We all know that our summer grain crops have a plenteous harvest this year with the amount of 123.35 billion kilogram, and the autumn grain crops, despite being subject to the drought, can still be expected a good harvest according to comrades investigating in the Heilongjiang Province. I should make it clear that in 5-year period there will be two year harvest, two year equal output and one year reduction of output. This is the circulation during the 60 years since the founding of the PRC. If there is a harvest this year, it means we have had six successive years of good harvest. So the agricultural stabilization lay a solid foundation for the stabilization of our national economy.

Secondly, the secondary industry. Industrial production increased 8.3% last March, in this April the growth was down a little to 7.3%, while raised in May, June and July. It increased to 10.8% in July, better than that of last October. From the industrial trend curve, we can clearly see the toughest period of our economy is last November, December, this January and February. So we can draw a conclusion that the worst period of our economy is over.

Another analysis is from demand perspective to see the three major demands, which is investment, consumption and export, which is the so-called three harness horse car for pulling the economy increasing. The investment amount in the first half of this year is 9100 billion Yuan, increasing 33.5% more than the same period of last year. This is amazing. More importantly, there are two characteristics in the investment, one is the acceleration of the growth of infrastructure　 investment. Social investment increased 33.5%, infrastructure investment increased 53.4%, and railway construction investment increased 120.5%. People have long sensed our regional investment is imbalance, but in the first half of this year the condition has been improved a lot. The investment growth in Tianjin is the fastest while the central and western regions also made a rapid growth. The investment contributed 6.2 in the 7.1 total growth rate.

The second horse car is consumption. To analyze it we should go back to the auto industry. Last year our chairman wanted to prepare for a celebration if our auto sales reaches 10 million and the speech paper has almost been finished, yet the convention was finally canceled. Why? Because the economic crisis makes the auto industry fails to achieve this goal. I met some people who aren't from the auto industry in the second half of last year; they were worried about our auto industry. I have said that except those experts in the auto field, there's nobody can forecast this year's trend correctly including those investors.

When I made a survey in Harbin this year, I found that in the first quarter the auto sales has increased 90% there and the small vehicle sold in our country has reached 772,000 exceeding the US to become the auto consumption giant. Someone doubted its sustainability thinking that in the following months there will be a decline. However, things never go like that. The production each month exceeds one million. Chief Chen said he makes the greatest contribution because in the Top Ten Revitalization Industries addressed by State Department, auto industry ranks first. Some policies like reducing the purchase tax on vehicles with engine capacity of less than 1.6 liters and giving the farmers some subsidies when purchasing motorcycle or car show great success in stimulating the national demand.

Besides the policy, we should consider the fact of consumption structure upgrading, which is an objective law. Our goal is to realize a well-off society by 2020, the period of which is important during the process of consumption structure upgrading and the vehicle is the hottest item during that period. I have said that vehicle is not only a substance, but also a symbol of cultural wealth and cultural asset. So I think before we step into the well-off society, the objective driving force to the development of our auto industry is consumption structure upgrading and then comes various kinds of some policy measures. In order to make this goal come true, we should strictly keep auto industry as a pillar industry of our national economy.

When we talked about the US, we say the high-technology. However, we should not forget that America has not relied on this factor alone. It is the three pillar industries including auto industry that pulls its economy in a strong place. Given the current condition in the first half of this year, auto industry plays a vital role in the recovery of our economy because it promoted more than 100 related fields.

Consumption has contributed 3.8 in the 7.1 economy growth rate. When adding the 6.2 investment growth rate, it equals ten. Why the actual rate is 7.1 instead of 10 ? It is due to the negative contribution made by export with -2.9%.

Why the foundation is not solid enough, imbalance and full of uncertainty? It is due to the deepest problems having not been fully resolved yet. Like Chief Chen just said, after guarantee economic growth, we should focus on adjusting structure. Although the industry is on the track of improving, yet the 7.5% growth rate in July is only the half level of the normal period. When the economy getting back to normal, the growth rate should be 15%. Additionally, the company profit is not high enough. This is why I am saying the foundation of recovery is not solid.

Why the pattern is still imbalance? As I just said, investment accounts for 6.2 in the total 7.1. If we make 6.2 divide 7.1, we got 87.6%, which means 87.6% of our economic growth coming from investment. We should follow what Premier Wen said to widen the growth space. We should make expansion of consumption as a primary concern, which I have already said in Asian financial crisis in 1997. In the past 10 years, the biggest achievement is the good performance of auto industry in the first half of this year. So from this perspective, as I mentioned just now, the global economy is still facing huge uncertainty. We hope those developed countries can finally realize a balance, yet, the whole process is very complicated.

From this aspect, someone has asked if the goal of 8% growth rate will be achieved? I answered although some difficulties there are no problem. I am confident about this. It's amazing for China to maintain this growth rate. The real problem is adjusting structure like Chief Chen said. I think only if we treat this crisis as an opportunity can we stand a chance to shift economic growth mode, optimize structure. Thus we can conquer this crisis and finally come to a new economic growth platform.（Qinghua/Shanglai）

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