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Viewing cable 07GUANGZHOU86, Hainan Province Q3 Economic Report

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Reference ID Created Released Classification Origin
07GUANGZHOU86 2007-01-19 08:42 2011-08-23 00:00 UNCLASSIFIED Consulate Guangzhou
VZCZCXRO2448
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0086/01 0190842
ZNR UUUUU ZZH
R 190842Z JAN 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 5702
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEHRC/USDA FAS WASHDC 0927
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI
UNCLAS SECTION 01 OF 02 GUANGZHOU 000086 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/CM 
USDOC FOR 4420/ITA/MAC/MCQUEEN 
STATE PASS USTR 
USPACOM FOR FPA 
TREASURY FOR OASIA/INA-CRANE 
USDA FOR FAS/ITP AND FAS/FAA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV EAGR ELAB CH
SUBJECT: Hainan Province Q3 Economic Report 
 
REF: A) 06 Guangzhou 29114 
 
     B) 06 Guangzhou 25667 
 
1. (U) SUMMARY: Hainan continued its strong growth in the 
first three quarters of 2006 with GDP growth of 12.1% - 
particularly in the manufacturing sector - exceeding the 
national growth rate of 10.7%.  The completion of the 
Yangpu refinery boosted the island province's oil refining 
capability by 307.5%.  Despite typhoon damage to crops, 
agricultural output increased by 9%.  Tourism revenues were 
up 9.8%, and fixed-asset investment was up 17.4%.  Hainan's 
major trade partners were Vietnam, Thailand, and Singapore. 
Major exports included machinery, natural gas, aquatic 
products, and garments.  According to the Hainan Statistics 
Bureau, problems that affected the Province's economic 
performance included: reduced investment in real estate due 
to government control measures and the rising price of 
energy and raw materials.  END SUMMARY. 
 
HAINAN FAST FACTS 
----------------- 
 
GDP, billion USD                              9.5 (12.1%) 
FDI, actual use, billion USD                  0.5 (8.4%) 
Imports, billion USD                          1.0 (-6%) 
Exports, billion USD                          1.1 (40%) 
Fixed-asset investment, billion USD           3.3 (17.4%) 
Retail sales, billion USD                     2.8 (14.3%) 
Consumer Price Index                        101.6 (1.6%) 
Disposable income per capita (urban), USD   950.4 (16.4%) 
Disposable income per capita (rural), USD   334.1 (9.6%) 
 
2. (U) Percentages in parentheses represent growth compared 
to the same period in 2005, according to the Hainan 
Statistics Bureau.  All currency conversions in this report 
are made at the average exchange rate of USD 1 = RMB 8.0071. 
 
3. (U) Hainan's GDP in the first three quarters totaled RMB 
76.37 billion (USD 9.5 billion), up 12.1% from the same 
period of last year.  The value-added of the primary, 
secondary, and tertiary sectors in the third quarter was: 
 
Primary sector:     RMB 25.06 billion (USD 3.1 billion) 
Secondary sector:   RMB 20.31 billion (USD 2.5 billion) 
Tertiary sector:    RMB 31.004 billion (USD 3.9 billion) 
 
This represents an increase of 9.0%, 18.1% and 11.0% 
respectively. 
 
INDUSTRIAL OUTPUT SOARS 
----------------------- 
 
4. (U) The value-added from industry in Hainan reached RMB 
15.3 billion (USD 1.9 billion), up 21.1%.  In the first 
three quarters, the value-added of industrial enterprises 
with annual sales revenue of RMB 5 million (USD 624,000) or 
more (enterprises "above designated size," according to the 
Statistics Bureau) reached RMB 13.9 billion (USD 1.7 
billion), up 22.8%.  The newly completed Yangpu Refinery 
increased the island's output of polyester and oil by 
507.2% and 307.5% respectively. 
 
AGRICULTURE 
----------- 
 
5. (U) Despite several strong typhoons, Hainan's 
agricultural value-added amounted to RMB 25.06 billion (USD 
3.1 billion), up 9.0% from the same period of last year. 
Of this total, animal husbandry reached RMB 3.9 billion 
(USD 0.5 billion), up 6.4%; fishery totaled RMB 5.96 
billion (USD 0.7 billion), up 11%; and agricultural 
services reached RMB 335 million (USD 41.8 million), up 
6.4%. 
 
TOURISM 
------- 
 
6. (U) Tourism experienced steady growth.  Revenue from 
domestic tourists, representing nearly 90% of Hainan's 
 
GUANGZHOU 00000086  002 OF 002 
 
 
tourism sector, in the first three quarters totaled RMB 
8.98 billion (USD 1.1 billion), up 9.8%; revenue from 
overseas tourists reached RMB 1.19 billion (USD 148 
million), up 68.0%. 
 
FIXED-ASSET INVESTMENT 
---------------------- 
 
7. (U) Fixed-asset investment in the first three quarters 
reached RMB 26.68 billion (USD 3.3 billion), up 17.4%. 
Projects above RMB 15 million (USD 1.9 million) accounted 
for 60.7% of investments, up 13.9%.  Investment growth in 
transportation, postal services, water conservation, and 
the environment was particularly strong. 
 
RETAIL SALES 
------------ 
 
8. (U) Retail sales in the province totaled RMB 22.13 
billion (USD 2.8 billion), up 14.3%.  Urban areas' retail 
sales reached RMB 17.48 billion (USD 2.2 billion), up 14.9%, 
while rural areas' retail sales reached RMB 4.66 billion 
(USD 581.6 million), up 12.1%.  The consumer price index 
rose 1.6%, the smallest fluctuation in the last 20 months. 
 
FOREIGN TRADE 
------------- 
 
9. (U) Hainan's foreign trade volume reached USD 2.1 
billion.  Exports reached USD 1.05 billion, up 40%, and 
imports accounted for USD 1 billion, down 6%. 
 
10. (U) Hainan's trade volume with ASEAN reached USD 245 
million, up over 40%.  Hainan's major trade partners were 
Vietnam, Thailand and Singapore.  Major exports included: 
machinery, natural gas, aquatic products, and garments. 
Exports of aircraft (through leasing agreements from Hainan 
Airlines) and their components amounted to USD 167 million, 
a substantial increase over last year.  Major imports were 
machinery, aircraft, aircraft parts, steel, minerals, and 
fuel.  Crude oil imports reached USD 390 million, 
accounting for 30% of total imports. 
 
11. (U) Hainan's trade volume with Taiwan grew by 25% to 
USD 62 million.  Imports increased by over 30% to USD 51 
million, while exports reached over USD 10 million.  Major 
imports were machinery, vehicles, vehicle parts, and 
organic chemicals.  Major exports included furniture, steel, 
and fertilizer. 
 
RESIDENTS' INCOME AND EMPLOYMENT 
-------------------------------- 
 
12. (U) Urban citizens' average disposable income for this 
period was RMB 7,610 (USD 950.4), up 16.4%.  Rural 
residents' per capita income reached RMB 2,675 (USD 334.1), 
up 9.6%. 
 
13. (U) The Statistics Bureau reported that 71,200 new jobs 
were created in the Province in the first three quarters, 
or 89% of the Province's annual job creation goal.  A 
social security system was established for urban employees. 
 
PROBLEMS IDENTIFIED BY THE PROVINCE 
----------------------------------- 
 
14. (U) The Statistics Bureau identified four main problems 
in the Province's economic performance: "structural 
problems" (a phrase usually used to represent an imbalance 
between the agricultural, manufacturing, and service 
sectors), insufficient large construction projects, reduced 
investment in real estate due to government control 
measures, and the rising price of energy and raw materials. 
 
GOLDBERG