GDP Revised

China's gross domestic product (GDP) in the first quarter was revised to 4.339 trillion yuan, 7.7 billion yuan higher than the preliminary estimate, the National Bureau of Statistics (NBS) said. It represented a year-on-year growth of 10.3 percent, up 0.1 percentage point from the previous announcement.

The NBS revised upward the added value of primary industry to 324.2 billion yuan, 4.2 billion yuan more than the earlier data. Year-on-year growth of the primary industry was scaled down 0.1 percentage point to 4.5 percent.

The added value of secondary industry was revised to 2.1614 trillion yuan, 100 million yuan less than previously reported, with the growth unchanged at 12.5 percent.

The added value and growth rate of tertiary industry were revised up by 3.6 billion yuan and 0.2 percentage points, to reach 1.8534 trillion yuan and 8.9 percent, respectively.

Banks

Assets and Liabilities. The first quarter saw a surge in the total assets of banking institutions in China, according to the China Banking Regulatory Commission (CBRC).

CBRC's preliminary statistics show that, at the end of March, domestic assets of banking institutions in China (in both renminbi and foreign currencies) totaled 39.19 trillion yuan, an increase of 19.2 percent year on year.

Total assets of state-owned commercial banks, joint-stock commercial banks, city commercial banks and other banking institutions grew 17.4 percent, 26.9 percent, 25.3 percent and 17.5 percent, year on year, respectively.

As of the end of March, total domestic liabilities (in both renminbi and foreign currencies) reached 37.45 trillion yuan, rising 18.6 percent year on year.

Total liabilities of state-owned commercial banks, joint-stock commercial banks, city commercial banks and other banking institutions rose 16.8 percent, 26.7 percent, 24.7 percent and 16.6 percent, respectively, on a year-on-year basis (see graph 1).

Non-Performing Loans. The downward trend in both the volume and ratio of non-performing loans (NPLs) of commercial banks remained in the first quarter of this year, after the NPL ratio dropped to one digit for the first time at the end of last year, according to CBRC statistics.

As of the end of March 2006, the outstanding balance and the ratio of the NPLs of commercial banks (including state-owned commercial banks, joint-stock commercial banks, city commercial banks, rural commercial banks and foreign banks) were 1,312.47 billion yuan and 8 percent, respectively, dropping 13.76 billion yuan and 0.6 percentage points from the beginning of this year.

In terms of the composition of the NPLs, the outstanding balance of the loan losses was reduced by 140 million yuan from the beginning of this year to 480.82 billion yuan, accounting for 36.6 percent of the total NPLs; that of the doubtful loans was lowered by 1.43 billion yuan to 503.51 billion yuan, occupying 38.4 percent of the total; and that of the substandard loans saw a decrease of 12.18 billion yuan to 328.14 billion yuan, accounting for 25 percent (see graph 2).

In terms of bank type, the NPL volume and ratio of major commercial banks (state-owned commercial banks and joint stock commercial banks) were 1,206.84 billion yuan and 8.3 percent, down 12.79 billion yuan and 0.6 percentage points, respectively, compared with the beginning of the year. To be specific, the NPL volume and ratio of state-owned commercial banks were lowered by 13.52 billion yuan and 0.7 percentage points, to 1,058.82 billion yuan and 9.8 percent, respectively. It's the first time that the NPL ratio of state-owned commercial banks had dropped to one digit. The NPL volume of joint-stock commercial banks stood at 148.02 billion yuan, an increase of 740 million yuan from the beginning of the year, while their NPL ratio fell 0.3 percentage points to 3.9 percent.

The NPL volume of city commercial banks was 86.15 billion yuan, 1.07 billion yuan more than at the start of the year, and the ratio declined 0.2 percentage points to 7.6 percent.

The NPL volume and ratio of rural commercial banks were reduced by 1.89 billion yuan and 1.4 percentage points, to 15.81 billion yuan and 7 percent, respectively.

The NPL volume and ratio at foreign banks dropped by 150 million yuan and 0.1 percentage point to 3.67 billion yuan and 1 percent, respectively.

CBRC said that, despite the continuous decline in NPL volume and ratio, banks should also be aware of the new challenges facing the disposal of NPLs as industries will be restructured and overcapacity will be controlled this year.

Non-Performing Assets.

Cash recovery ratios of the four corporations were 22.15 percent at Huarong, 10.28 percent at Great Wall, 23.11 percent at Orient and 31.56 percent at Cinda.

Aviation

The General Administration of Civil Aviation said that, according to statistics from the International Civil Aviation Organization, overall aviation turnover of scheduled flights of Chinese airlines reached 25.7765 billion tons per km in 2005, inching up 12 percent over 2004. That pushed China's ranking up from third place to second, overtaking Germany and only after the United States.

The figure does not include China's Hong Kong, rising 13 percent to 14.606 billion tons/km, Macao, growing 28 percent to 410 million tons/km, and Taiwan.

But it still lags behind the United States, which recorded a 5 percent growth in turnover to 152.009 billion tons/km, 3.7 times as much as that of the Chinese mainland, Hong Kong and Macao.

Of the total of the Chinese mainland, turnover of international routes climbed 9.2 percent to 8.387 billion tons/km, still ranking 10th in the world.

China's passenger turnover reached 201.96 billion persons/km, up 14.6 percent, moving up from third place to second in the world, following the United States. Its cargo turnover stood at 7.579 billion tons/km, up 7.9 percent year on year, with its ranking in the world dropping from third place to fourth. China's Hong Kong saw a cargo turnover of 7.764 billion tons/km last year.

IT

The International Data Corp. (IDC), the premier global market intelligence firm, forecasts that China's IT security market would grow 20.9 percent annually over the next five years.

According to results from IDC's Asia-Pacific (excluding Japan) Semiannual Security Software Tracker, the security software market in the Asia-Pacific region totaled $805 million in 2005, representing a year-on-year growth topping 23 percent. The Asia-Pacific (excluding Japan) security software market is expected to rise to $1.7 billion by 2010, representing a compound annual growth rate of more than 15 percent. Continued growth is expected in the security software market in the next five years, with India, China and Malaysia leading the growth. However, Australia is expected to remain the largest market in the region in 2010.

IDC predicts that the security software market on China's mainland will grow 22.6 percent annually in the next five years.

In IDC's latest forecast of the IT Services marketplace for the Asia-Pacific region, excluding Japan, it predicts 2010 is the year that China will overtake Australia to be the largest opportunity for IT services provision in the marketplace, with China grabbing 24 percent of the Asia-Pacific region, excluding Japan.

IDC has forecast that the market will grow from $29.57 billion in 2005 to $48.37 billion in 2010, representing a compound annual growth rate of 10 percent over the forecast period.