Chongqing Municipal Government | Overview of the Local Economy in 2007

(Municipal Bureau of Statistics)

Chongqing really made a good performance in 2007 since 1997. The growth rate of its economy ranked the third across the county, which was 15.6% on year-on-year basis, the fastest growth since 1997. The local GDP reached RMB 411.182 billion, the first time exceeding RMB 400 billion. The per capita GDP reached RMB 14,622, increasing 15.2%, also the fastest growth since 1997. (See Figure 1)

(I) Good Start and Strong Growth

The year 2007 made a good start. The local GDP grew by as high as 13.5% in the first quarter and the even one base point higher in the fist half, by 14.5%. The growth became faster in the third and fourth quarter, hitting 15.3% in the first three quarters, 0.8 base point higher than first half-year rate, and 15.6% in the whole year, the highest since 1997. The unprecedented GDP growth is rare compared with other provinces across the country. The growth rate in the first quarter ranked 17^th nationwide, 12^th in the first half, the 4^th in the first three quarters and the 3^rd in the whole year. This has made Chongqing one of the fastest growing regions other than moderately growing regions. (See Figure 2)

(II) Growing Fiscal Capability

Chongqing��s fiscal capability has been growing following the rapid growth of the economy. The total local revenue in 2007 was RMB 78.856 billion, 31.8% than the budget target and up 48.9% year-on-year. This is unprecedented since 1949 and the fast growth of fiscal revenue enables the Municipal Government to leverage the economy with more financial resources, to enhance social management, improve standards of public services, and to facilitate the harmonious development of urban and rural areas and ultimately the construction of the ��harmonious society��.

Fast growth of the fiscal revenue reflects, inter alia, the growing profitability of the businesses. Corporate income tax reached RMB 2.584 billion, 30.6% higher than the annual budget and up 50.6% on a year-on-year basis. The increased profitability of the businesses will enable them to put more funds for expanding production, scale for seeking for scalability.

(III) Continuously Optimized Economic Portfolio

Along with the fast growth of the local economy in 2007, the economic portfolio was optimized continuously. The industrial composition became more appropriate to enable the sustainable and healthy growth of economy.

1. Change in the Industrial Composition

In 2007, the primary industry achieved added value of RMB 53.165 billion, up 9.5%, the secondary industry RMB 183.222 billion, up 20.3%, where the manufacture sector added value of RMB 151.472 billion, up 22.1%, and the tertiary industry RMB 174.795 billion, up 12.8%. The composition of the three sectors of economy was 12.9:44.6:42.5. (See Figure 3)

In terms of industrial composition, the highest weight before 1992 was the secondary industry and the lowest the tertiary; the highest weight between 1992-1997 was the secondary industry and the lowest the primary while the 22% of the weight of the primary industry reflected the low development of Chongqing��s economy. The highest weight fell to the tertiary industry between 1997-2006 and the lowest the primary. This prevented the fast growth of economy which is usually driven by the secondary industry. In 2007, the highest weight fell to the secondary industry again and the lowest the primary while the primary industry only accounted for 12.9%, 11.3 base points down from 1996. This indicated the higher level of Chongqing��s economic development, thanks to the development and accumulation in ten years. The change endorses the optimization of the local industrial composition and the adaptation to the development requirement for the local economy and paves the way for future growth in a sustainable and healthy manner.

2. Rapid Development of the Non-public Sector

Amidst the furthering of the ��Government for the People and Service for Development�� initiative, the Municipal Government released a handful of policies encouraging the development of non-public sector to create a climate benefiting the non-public sector. Statistics showed that in 2007, the non-public sector achieved added value of RMB 226.561 billion, accounting for 55.1% of the GDP, 2 base points higher then percentage in the previous year. The non-public sector grew by 20.0%, 4.4 base points higher than the local GDP growth rate, 1.8 base points higher than the growth rate in the previous year. And the fast growth is likely to continue. (See Figure 4)

Literature unveiled that in 2006, the proportion of the non-public sector to the GDP ranked first among the provincial level municipalities and in West China. That was respectively 9.0 and 0.4 base points higher than the proportion in Shanghai and Tianjin, 2.3 and 6.2 base points than the proportion in Guangxi and Sichuan, the second highest and third highest respectively. The non-public sector, which was vital for market economy, injected great power into the rapid economic development of Chongqing.

3. Economic Growth Driven by Both Consumption and Investment

The driving forces to the growth of economy were continuously optimized. The driving forces became the consumption and investment other than investment only since 2005. Estimate shows that the final contribution to the growth of GDP by consumption would be 54.9%, driving the GDP to grow by 8.6%, and the 59.7% by the investment which drove the GDP to grow by 9.3%, 2.5 and 0.2 base points higher than the contribution in the previous year respectively. (See Figure 5)

(IV) Rapid and Stable Increase of Investment in Fixed Assets

In 2007, the investment in fixed assets increased rapidly and stably. In the first seven months, the investment in fixed assets increased monthly and after the growth rate of investment reached the highest point, 34.2%, in July, the growth became stable from August. The accumulative year-on-year growth rate of each month kept within 32% to 33%. In December, the investment growth rate declined slightly. In 2007, Chongqing accomplished social investment in fixed assets of RMB 316.152 billion, up 28.9%. (See Figure 6)

The secondary industry singled out in the investment in fixed assets, increasing by 43.5%, 14.6 base points higher than the average growth rate while the growth rates of the primary and tertiary industries were 13.8% and 6.2% lower than the average growth rate of the city. In the secondary industry, the growth rate of the investment in manufacture sector was 44.0%, 15.1 base points higher than the average growth rate of the city. The increasing growth rate of the investment in manufacture sector made the investment proportion in manufacture sector continue to increase and strengthened the power of industrial development.

(V) Higher Openness of the Economy

In 2007, foreign trade and economic relations maintained rapid growth and achieved higher openness of the economy. The total value of import & export reached USD 7.445 billion, increasing by 36.0%, 8.6 base points higher than the previous year; the foreign trade dependence reached 13.8%, 1.3 base points higher than the previous year. In 2007, the foreign investment actually used was USD 1.089 billion, increasing by 55.1%; the domestic investment actually used was RMB 43.003 billion, increasing by 44.2%. The growth rates of foreign and domestic investment created the highest records in history.

(VI) Substantial Increase of the Income of Residents

The rapid growth of economy in 2007 led to substantial increase in the income of residents. At the same time, the growth rate of the per capita net income of rural residents exceeded that of the disposable income of urban residents as the prices of main agricultural products went up largely and the migrant workers from rural areas continued to increase. The per capita net income of rural resident in the year reached RMB 3,506, increasing by 22.0%, 14.2 base points higher than the average growth rate of the five years (2002 to 2006) since 1997; the per capita disposable income of urban resident reached RMB 13,700, increasing by 18.5%, 6.5 base points higher than the average growth rate of the five years (2002 to 2006) since 1997. (See Figure 7)