The Chinese Government will focus on five specific sectors to maintain economic growth, a senior official said Thursday.

Tens of thousands Shanghai residents are attracted to a housing exhibition opened at Shanghai Exhibition Centre on July 25, 2003. Demand in the housing market sees rapid rebound after SARS. [newsphoto.com.cn]

The sectors are housing, cars, information technology, healthcare and education, which have increasingly made up the lion's share of Chinese people's consumption.

Zheng Xinli, deputy director of the Policy Research Centre affiliated to the Central Committee of the Communist Party of China, told an international seminar on real estate and construction held in Beijing Thursday: "Based on China's current economic development pattern, we have decided the guiding policy.''

China's gross domestic product (GDP) increased 8.2 per cent year on year in the first half of this year, overcoming the shadow of SARS (severe acute respiratory syndrome) that plagued the economy in the spring.

Fixed-asset investment in the first half of this year soared 31.1 per cent year on year. The balance of bank loans increased by 22.9 per cent, the highest growth rate since 1996.

However, consumption grew by just 9 per cent compared with the same period of last year.

"The growth imbalance is likely to expand the continuous oversupply of some products on the market,'' said Zheng.

Official statistics indicate that about 85 per cent of 500 everyday commodities on the Chinese market are oversupplied and no commodity falls short of demand.

Urgent measures needed to tap the potential of domestic consumption are to fatten the wallets of farmers and create more jobs, said Zheng.

"Decreases in farmers' income and unemployment in cities are two urgent problems facing the government,'' he said.

Last Saturday, the State Council urged local governments to do more to increase farmers' income and help them survive the fallout from the outbreak of SARS as well as other natural disasters.

A nationwide survey by the National Bureau of Statistics showed that farmers' per capita cash income grew by a meagre 3.2 per cent year on year in the first half of this year, down 3.4 percentage points on an inflation-adjusted basis. Meanwhile, the per capita disposable income of city dwellers increased by 9 per cent to 4,301 yuan (US$520).

Worse, in the second quarter when the SARS epidemic peaked, rural people actually earned on average only 421 yuan (US$50.90) in cash, 11 yuan (US$1.30) less than during the same period the previous year. The contraction of farmers' cash income could foil the government's efforts to narrow the already huge gap between urban and rural areas.

Visitors look at a car at an automobile exhibition in Beijing. The number of registered automobiles in the Chinese capital topped 2 million, including 1.28 million private ones, according to the latest figure. [newsphoto.com.cn]

Non-agricultural income has become a major source of growth in farmers' income in recent years. But the SARS outbreak deprived many rural migrant workers of their jobs in the cities during the second quarter.

Mindful of this problem, the government reiterated the importance of creating non-farming job opportunities for rural migrants in late June, when the country was bringing the SARS epidemic under control.

In the cities, the registered jobless rate climbed to 4.2 per cent, 0.2 percentage points higher than the rate at the end of last year.

To tackle the problem, the State Council has planned a high-level national conference scheduled to be held today in a bid to create more jobs.

Data from the Macroeconomics Research Institute under the National Development and Reform Commission show that China's GDP is expected to reach 1.1 trillion yuan (US$144 billion) this year, for an estimated growth rate of just over 8 per cent.

Chen Dongqi, the institute's vice-president, said: "China has returned to the fast track of economic development.''

He said he believed that China's new round of economic growth would not be held back by the effects of the SARS outbreak in April and May or the droughts and floods that have affected many regions of the country this summer.

He forecast that China's economy will increase by 7.5 per cent year on year in the third quarter of this year and by 8 per cent in the fourth quarter.

In the first quarter, the country's economy rose by 9.9 per cent year on year, which was the highest growth rate since 1997. But the growth rate fell to 6.5 per cent during the second quarter due to SARS.

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