On January 24, the National Development and Reform Commission (NDRC) held a press conference to review the economic performance of 2005 and provide insights into the outlook for 2006. Deputy Director Zhu Hongren from the Economic Operation Bureau emphasized that while the global and domestic environment remains generally favorable for China’s sustained and rapid economic growth, several challenges persist in the current economic landscape.
Zhu highlighted that key issues such as the imbalance between coal, electricity, and oil supply and demand have not been fully resolved. Additionally, overcapacity in certain industries has become more pronounced, leading to growing uncertainties in economic operations. These challenges are expected to remain significant throughout the year.
Regarding the transportation of critical resources like coal, electricity, and oil—factors closely tied to chemical production—Zhu noted that while overall supply and demand conditions are expected to improve this year, regional and temporary shortages will still occur. For instance, although the national coal balance is relatively stable, some areas may face supply shortfalls while others experience oversupply. The electricity gap is projected to be around 10 million kilowatts, a significant decrease compared to 25 million kilowatts in 2005 and 35 million kilowatts in 2004. However, power shortages are still expected in parts of North, East, Central, and South China. Meanwhile, natural gas demand is rising rapidly, exacerbating supply constraints. Transport bottlenecks, especially in the northwest, northeast, and southwest regions, also remain a concern.
The NDRC analysis pointed out that with the completion of numerous new projects over the past two years, overcapacity has become more evident in certain sectors. Industries such as chemicals, coke, calcium carbide, and automobiles are particularly affected. Other sectors, including power, coal, and textiles, also show signs of excess capacity.
Zhu further explained that while China is currently experiencing a golden period of economic growth with per capita GDP reaching $1,000, this stage is also marked by an increased likelihood of public emergencies. Adding to these concerns are rising international trade tensions, persistently high crude oil prices, and rising costs for downstream industries, all of which contribute to greater uncertainty in economic operations.
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