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Development Smoother, Faster; Economic Structure Continued to Improve

Beijing's 2004 economic performance tracked, in many ways, the performanced of 2003; it continued to develop at high speed and was loaded with potential.

On January 23, 2005, Mayor Wang Qishan used "Smoother and faster development" and "adjusted and optimized structure" to summarize Beijing's economy of 2004. A closer look at the data reveals that there is rich content in Wang's brief comment.

Balanced Growth with High GDP

In 2004, Beijing's GDP (gross domestic product) rose to 428.33 billion yuan (US$49 billion), up 13.2 percent over the previous year and the highest annual increase in 10 years. Beijing's economy is second only to Shanghai's in this regard. A per capita GDP of 37,058 yuan (about US$3,457 dollars) indicates the economic and social development of Beijing has basically reached the level of a city in an average developed country.

While growing rapidly, Beijing also improved its economic structure. Non-agricultural sectors contributed to 97.6 percent of the city's 2004 GDP. Secondary industry's proportion grew by 1.8 percentage points. The structure of the Beijing economy became more commensurate with the city' s status as China's political and cultural centre and as a centre of international communication.

The local government revenues increased by 29.7 percent to 74.45 billion yuan (US$8.53 billion) in 2004. Local government expenditures came to of 86.26 billion yuan (US$9.89 billion), 23.4 percent more than the previous year. Spending on social security, agriculture and education increased by 75.5 percent, 26.8 percent and 21.6 percent, greater than for any other sectors. Expenditures on science, education, culture and health rose to 21.36 billion yuan (US$2.45 billion), and accounted for one-fourth of the city's spending.

Investment and Consumption

"Smoother and faster development and an adjusted and optimized structure"  prevailed in Beijing' s investment market in 2004 as well. Beijing's entire social fixed-assets investment totalled 252.83 billion yuan (US$28.98 billion) in 2004, up 17.2 percent over year 2003, 1.7 percentage points smaller than the year-on-year growth achieved in 2003. Nevertheless, there was a 22.7 percent increase in the investment in urban infrastructure development, indicating the success of the city in implementing central government macroeconomic-control policies. Reform of the investment and financing systems continued to deepen in 2004, making it possible for the non-state sector to play a pivotal role in promoting the city' s economic development. In 2004, investments made by the non-state sector totalled 177.3 billion yuan (US$20.32 billion), up 26.3 percent over 2003. Such investments accounted for 70.1 percent of the city's entire fixed-asset investments, 5 percentage points greater than the figure for the previous year.

The incomes of Beijing residents grew significantly in 2004. With deductions made for inflation, per capita disposable incomes grew by 9.2 percent for urban residents. There was a real increase of 9.3 percent in per capita incomes of rural residents. Each member of Beijing's urban population spent, on anaverage, 12,200.4 yuan (US$1,398.33) in 2004, an increase of 8.6 percent over 2003, and the corresponding figure was about 4,886 yuan (US$ 560) for the rural population, up 3.9 percent.  The Engle' s Coefficient was computed at 32.2 percent for the urban residents and 32.6 percent for the rural residents, indicating an increase in expendable income.

Retail sales boomed thanks to increased personal incomes. The city' s 2004 retail sales of consumer goods came to 219.18 billion yuan (US$25.12 billion), up 14.4 percent over 2003. There was a rapid increase in sales of durable goods such as cars, housing and communications products. At the end of 2004, there were 152 chain commercial enterprises in Beijing, which together generated 63.52 billion yuan (US$ 7.32 billion) in retail sales revenue, up 4.1 percent and 32.6 percent year-on-year. Chain businesses took a 29 percent share of total retail sales for the year.

As the host city of the 2008 Olympic Games, Beijing will continue to enjoy a business boom over the next few years.

New Opportunities for Secondary and Tertiary Industrial Development

Industrial development and upgrading continued in 2004. The annual added value generated by Beijing's manufacturing sector was assessed at 129.02 billion yuan (US$14.79 billion). That represented a 19.3 percent increase over the previous year, which was 7.1 percentage points higher than the annual growth achieved in 2003. The sector was responsible for 43.4 percent of Beijing's 2004 economic growth, compared with 33.4 percent for the previous year. Enterprises using foreign investment and investment from Hong Kong, Macao and Taiwan generated 47.48 billion yuan (US$5.44 billion) in added value, an increase of 24.9 percent.

Local industries are making leapfrog progress in upgrading themselves. Of these, seven achieved an increase of at least 20 percent in added value. These included the industries that manufacture of special equipment, communications and transport equipment, the pharmaceutical industry, the petroleum processing industry, the coking industry and the nuclear fuel industry. The manufacturing of communications and transport equipment generated an added value of 12.31 billion yuan (US$1.41 billion), up 58.6 percent over the previous year. The annual composite index of manufacturing enterprises was 169.3 percent, up 18.4 percentage points over the previous year. Beijing's high-tech industry, a leader in the city's industrial effort, also saw rapid growth with an added value of 37.77 billion yuan (US$4.33 billion), up 17.7 percent. In 2005, Beijing will continue to expand six modern manufacturing industries: electronic information, automobile manufacturing and new petrochemical materials industries, advanced-equipment manufacturing, and the biotech and modern pharmaceuticals industries.

The city made fresh progress in developing its modern service industries, led by the financial insurance industry, information service industry, cultural industry and modern logistics. Beijing's financial insurance industry in 2004 yielded an added value of 59.86 billion yuan (US$6.86 billion), up 5.4 percent over the previous year. At the end of 2004, the total credit balance of Beijing's domestically funded financial institutions was computed at 1.26002 trillion yuan (US$144.41 billion), 145.7 billion yuan (US$16.7 billion) more than at the beginning of the year, while deposits had a balance of 2.16259 trillion yuan (US$38.14 billion), 332.74 billion yuan more.

Beijing's tourism industry has recovered from the onslaught of a SARS outbreak which, for a time in 2003, almost paralyzed the country. The city reported 31.55 million foreign tourist arrivals in 2004, up 70.4 percent over the previous year. The tourism industry's foreign exchange revenue rose to US$3.17 billion, up 66.8 percent. At the end of the year, there were 613 star-grade hotels in the city offering 91,000 rooms. The occupancy rate averaged 64.7 percent for the year, 13 percentage points greater than the 2003 figure.

The information services industry, real estate industry, wholesale and retail industries have contributed immensely to Beijing's economy, by generating, separately, 31.78 billion yuan (US$3.64 billion), 22.84 billion yuan (US$2.62 billion) and 26.37 billion yuan (US$3.02 billion) in added value in 2004.

All-Round Progress in Foreign Trade and Economic Cooperation

At the end of 2004, the city was home to 7 regional headquarters set up by multinational firms, 139 investment corporations and 189 research centres. Throughout the year, Beijing received US$3.08 billion in FDI (foreign direct investment), and contracts were signed on use of US$6.26 billion in foreign capital. The figures represented year-on-year increases of 43.3 percent and 91.4 percent. Also worth mentioning is the fact that foreign investments were made in more industries. Of the contractual investment received by the city, 61.8 percent went to the modern service industries.

In 2004, the exports and imports handled by the Beijing Customs were valued at US$94.66 billion, 38.2 percent over the 2003 figure. The figure was US$28.07 billion for local importers and exporters, up 48.3 percent. The product-mix of exports continued to improve. Exports of high-tech products were valued at US$5.17 billion, up 51.7 percent, which was 48.8 percent of the local export total.

The year of 2004 was splendid for the local economy. On that basis, Beijing has been working hard to make still greater achievements.

In January 2005, the State Council approved the Overall Plan for the Development of Beijing City, which calls for developing Beijing as "the national capital, an international city, a cultural capital and a congenial city to live and work in." Accordingly, municipal authorities have mapped out a set of targets to be attained in the course of the city's endeavor to modernize.

In May 2005, the Fortune Global Forum, Beijing was held in China for the third time. Global business elites gathered in Beijing, passing to the whole world this message: This ancient, modern city's achievements have attracted worldwide attention, and her future will be more than is widely anticipated.