Yang Jianlong

I. Industrial Clusters Driven by the Upgrading of Consumption Structure Will Maintain a Steady and Rapid Growth.

Since 2002, growing prosperity of the main industries in China’s industrial field has split up evidently. A number of industries that are closely related to the upgrading of the residents’ consumption structure have generally shown a momentum of rapid growth, such as automobile manufacturing, food industry and real estate. In 2003, such a trend became more obvious. In 2004, industries that are directly bound up with the upgrading of consumption structure will maintain the momentum. Industries like automobile manufacturing and computer industry will maintain a higher level of prosperity and there is further space for the growth; the food industry will continue to be a sector of good prosperity. Meanwhile, development of the industries directly related to the upgrading of consumption structure will also bring about the development of a number of downstream industries. Building material industry, electronic components manufacturing industry and papermaking and printing industry will also show a comparatively good trend of development.

II. Industrial Clusters of Manufacturing with Features of Heavy Industries Will Witness Fast Development.

On one hand, with the rapid development of the consumer goods industries, drive of the demands in the upstream manufacturing industries as well as the drive of the relevant investment will be further strengthened in 2004; on the other hand, pace of global manufacturing industry moving to China is continually accelerating and China is entering into a new stage of heavy industries. Under such an influence, the trend of China’s heavy industries developing in an accelerated way is gradually evident. The trend of rapid development coming into being over past two years of such industries as chemical industry, mechanical industry, iron and steel industry, non-ferrous metals industry and building materials industry will still last a longer period of time. Level of prosperity will be able to stay within a good range, and the feature of "heavy industries " in the national economy will become increasingly apparent.

III. Energy and Raw Material Industries Are Likely to Become New Growth Bottleneck.

In 2003, demand for energies and raw materials caused by the rapid development of heavy industries once gave rise to a tense situation of supply shortage in the area of steel products, raw materials for chemical industry and electric power, and resulted in soaring prices for means of production, which had rarely been seen in years. At the same time, prices of the resource products in international market went up, also leading to the rise of prices of the related products in China. Such a drive of demand will further penetrate into the upstream fields of basic energies and raw materials, such as iron ore, coke and coal and crude oil. In 2004, as it is hard to speed up remarkably the supply of raw materials and the expansion of production capacity of the upstream industries in a short period of time, plus the production-limiting adjustment by part of the countries in consideration of the resource shortage, there is little possibility for evident improvement of supply and demand situation in the areas of energies and raw materials. It is estimated that in 2004, prices for raw materials will remain at a higher level and the energy and raw material industries will deeply benefit from it. The non-ferrous metal industry, iron and steel industry, petrochemical industry, rubber manufacturing industry and chemical fiber industry will stand at a higher level of boom.

IV. High Science and Technology Industries Are Experiencing Unbalanced Development.

In 2004, computer manufacturing industry and electronic components and devices manufacturing industry will be industries of high prosperity and high growth. As the market has reached its relative saturation and the competition has become prominently fierce, the prices of communication equipment have dropped drastically, thus leaving the prospects for the recovery of communication equipment manufacturing industry quite unclear. The high science and technology industries are in a state of unbalanced development. However, forecasts have shown that, under the influence of the investment cycle of the telecommunications industry, the communication equipment manufacturing industry is likely to show an obvious momentum of picking up at the end of 2004 or in the beginning of 2005.

V. Export-oriented Industries are Held Back in Their Prosperity The rapid growth of export over recent two years has made China a country suffering most from the global anti-dumping and technical trade measures. It is estimated that in 2004 the anti-dumping investigations and technical trade barriers to be encountered by China-made products will increase by degrees and will bring a lot of negative influences on China’s export growth. Industries highly dependent on export as textile products and garment industry, chemical raw material manufacturing industry and part of domestic electric appliances manufacturing industry will experience a boom fluctuation and even reduction to a certain extent.

April 2004