The aim of 7 per cent economic growth set at the beginning of the year can be realized if correct measures are taken, said a senior economic official yesterday in Beijing.

The outbreak of SARS did not affect the basic factors of China's economic development and will not hinder economic growth, Ma Liqiang, general director of the Economic Operation Bureau under the State Development and Reform Commission, said at an economic meeting organized by the National People's Congress (NPC) Standing Committee's Financial and Economic Committee.

Ma stressed that further efforts should be taken in the second half of the year to expand domestic demand and employment opportunities, adjust economic structures, deepen reform and strengthen regular epidemic prevention work.

The pace of China's economic development is pleasing, but the nation's top lawmakers are wary of possible risks, as domestic consumption drops and the employment outlook seems uncertain.

Lin Zhaomu, a member of the NPC financial and economic committee, was quoted by the China Central Television as saying the pace of growth is important, but it is not the only parameter.

Lin believes China's current economic structure is uneven.

The service sector floundered due to SARS and the growth rate of people's incomes dropped. The situation with employment and rural income is also exacerbated.

These areas are China's weak points and they are getting worse, Lin said.

Participants at the meeting believe it is dangerous that infrastructure investment has become the major driver of economic growth while domestic consumption remains sluggish.

He Keng, the former deputy director of the National Bureau of Statistics, said: "We should limit infrastructure construction and try to boost domestic consumption. China's domestic consumption ratio is 20 per cent less than the world average. And the figure is still dropping.''

In 2001, the consumption ratio was 46.5 per cent. Last year it was 45.2 per cent.

And He said the percentage will shrink again this year as SARS-led uncertainties drive residents to tighten their purse strings further.

Zhou Zhengqing, the former chief of the China Securities Regulatory Commission, also noted problems in the financial sector.

Zhou said although total outstanding loans have surged, rural areas and small and medium-sized enterprises (SMEs) are still finding it hard to obtain financing.

"About 66 per cent of SMEs found difficulties in getting loans, despite the fact that SMEs are the key drivers of employment -- so this is a major concern,'' Zhou said.

Zhou also pointed out that China's relatively small proportion of direct financing will increase financial risks in the capital market.

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