Global Slowdown Threatening Chinese Economy

China's top planner has identified five major challenges to the Chinese economy and says the global slowdown is the most serious.

The frank assessment by Planning Minister Zeng Peiyan came on Wednesday when he briefed the National People's Congress Standing Committee in Beijing on the economy, according to a report by Xinhua on Thursday.

"The most serious problem China confronts at the moment is the harsh international economic situation, the impact of which is being felt here," Mr Zeng was quoted as saying.

The minister said a worldwide contraction in demand was hurting Chinese exports.

Exports were also coming under pressure as rival countries devalued to make up for their shortfall in exports.

Mr Zeng was the second senior official to express concern about China's economy in recent weeks. Premier Zhu Rongji sounded the alarm 10 days ago when he said the Government had to take action to sustain the current economic momentum.

According to Xinhua, the other four economic challenges identified by Mr Zeng were:

  • A slowdown in farmers' income growth;

  • Oversupply in most goods but weak domestic demand;

  • Worsening unemployment. The urban unemployment rate has reached 3.3 per cent; and

    Two consecutive years of drought which have caused more hardship for farmers and affected industrial production in cities.

    "Moreover, market disorder remains serious and we have yet to stop the frequent occurrence of major accidents," Mr Zeng said. "They affect the normal operation of the economy and social stability."

    Mr Zeng's remarks indicate that although China continues to enjoy robust growth, officials are aware that the economy will not be immune if the world economy continues its downward slide.

    Mr Zeng's report was reviewed by committee members on Thursday. According to Xinhua, they urged the Government to take active steps to prevent a deterioration in the economy.

    They said some local governments were already feeling the pinch as their financial revenue dropped because of the fall in exports. Xinhua said some members worried that the income gap would widen as China wrestled with the economy. "Some members voiced concern that farmers in some central provinces would have difficulties increasing their income and many families in western provinces would once again fall below the poverty line," Xinhua said.

    China is the only country in the region to report a relatively high economic growth rate this year. The Government still forecasts a growth rate close to eight percent for this year. Analysts have said that economies of neighbouring countries will also suffer if China failed to sustain its momentum.

    (Chinadaily.com.cn 08/31/2001)


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