Politic-Economic-Society-Tech

China bulls ahead in bearish global market 

Latest official figures indicate that China's economy continued its growth momentum in the first half of this year, amid the world's gloomy economic environment. 

In the past six months, the national economy grew by about 8 percent. The volume of exports was US$124.57 billion, up 8.8 percent from the same period last year, while industrial output increased 11 percent. 

Such figures are identical to those in 1997, when the Asian financial crisis smashed the economies of the countries that had led Asian economic development for years, while the Chinese economy survived basically unscathed. In 1997 and during the years that followed, China's economic growth managed to stay at around 8 percent, and the value of the yuan remained stable, contributing greatly to helping other Asian countries recovering from difficult conditions. 

Economists generally hold that a major factor behind the nation's economic strength is the expansion of domestic demand, and external changes have only had a minor impact on its economy. Chairman of the Hongkong and Shanghai Banking Corporation Ltd, D G Eldon, said that global economic slump can hardly affect China as the country's domestic consumption demand and overseas direct investment keep on rising. The reform and opening up efforts have made it a magnet for international investors, he added. 

Wu Jinglian, one of China's most famous economists, said that the government's pro-active financial policies and incentive policies for suppliers have made outstanding achievements, and if those policies are able to continue, the economy will maintain its powerful growth for the whole year. In Wu's view, another important factor backing the stable economic growth is that a mechanism for fair competition among all kinds of ownership has been established, which has helped rejuvenate enterprises, especially those which are privately owned. 

For years, China has firmly practiced a range of economic policies and critical reforms in the fields of finance, state-owned enterprises, banking, grain circulation and social security system. Economic restructuring is another focal point, which has been listed as this year's top task. Those policies and reforms have helped it tackle many thorny problems in economic development. 

One of the most typical achievements is the favorable change in commercial banks' nonperforming loans: the central bank announced recently that the ratio of nonperforming loans has begun to enjoy a net decrease since late last year, and in the first six months of this year it fell by 2.1 percentage points. 

Deputy Director of the National Bureau of Statistics, Qiu Xiaohua, said that China's price changes are in good condition and there is currently no danger of inflation. China maintains a surplus in the balance sheet of international payments and the credit structure is also improving. 

As a result, steady growth will be the main theme for the Chinese economy in throughout the whole year. 

Successful economic reform over the past 20 years has paved the way for China's stable and healthy economic development in the future. Beijing's success in winning the right to host the 2008 Olympic Games and it's imminent entry into the World Trade Organization are expected to be new forces driving forward China's economy. 

Fifteen senior fund managers from the United States, Europe and Asia made the following comment on China's economic prospects upon ending their recent visit to the country: "In a clumsy Asian and global economic environment, China is an exceptional oasis - this country is telling the most important economic and investment stories in the 21st Century." 

Another reason for China's success was an accelerating influx of foreign direct investment (FDI) during the first half of this year, which totaled US$20.69 billion. The figure represents an increase of 20.5 percent over the same period of last year, Ye Zhen, spokesman of the National Bureau of Statistics (NBS), said at a press conference held by the Information Office of the State Council. 

Ye said that the Chinese government approved 11,973 new projects involving foreign investment during the January-June period, a year-on-year increase of 18.5 percent. According to the NBS, the average scale of the new foreign-funded projects was $400,000 larger than that of last year. 

Meanwhile, foreign-funded enterprises in the coastal areas of the country have channeled the majority of their additional investment to such areas as telecommunications and high-tech products. The bureau statistics showed that the contract value of FDI reached $33.4 billion in the first half of the year, up 38.2 percent from the same period last year. These figures well indicate that a new round of foreign investment in China will begin soon, Ye said. 

Taiwanese investment in mainland China also rose in the first half of 2001, according to new figures from the Investment Commission of the Ministry of Economic Affairs. 

The same statistics add that Taiwan's outbound investment to nations other than mainland China similarly grew during the same period, although inbound investment to Taiwan decreased. 

According to the commission, Taiwan investors put a total of $1.36 billion in capital investment into mainland China during the January-June period, an increase of 23.46 percent over the year-earlier level. Of that, investment in Jiangsu province accounted for $723.17 million, indicating that the Yangtze river delta has become the main investment destination for Taiwan investors, a MOEA official said. 

During the same period, Taiwan outbound investment to nations other than the mainland reached $2.53 billion, representing an increase of 33.32 percent over the same period of last year. 

Meanwhile, inbound investment totaled $2.8 billion, a decrease of 22.11 percent over the like period of last year. 

(Asia Pulse) 

source: atimes.com, 19 July 2001