Economists Divided on China's GDP Growth in 2002

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Last updated at: (Beijing Time) Friday, January 04, 2002

Economists Divided on China's GDP Growth in 2002

Economists are divided on their predictions for China's economic growth in 2002 as the slowdown in the global economy persists.

Optimist: active private and foreign investment

Chen Dongqi, chairman of the Economic Research Institute under the State Development Planning Commission (SDPC) said he believed that gross domestic product (GDP) this year is likely to reach 7.5 percent -- higher than the 7.3 percent expected for last year.

The government recently decided a target growth rate of about 7percent this year while some international organizations believe 6.5 percent is a more likely target.

Economic forecasts for China went on an upward spiral from 2000following an eight-year adjustment period from 1993, when it registered 7.1 percent growth. The 1999 GDP rate was also 7.1 percent and that of 2000 was 8 percent, said the paper.

Chen said that although economic increase was interrupted by the terror attack on the United States on September 11, the interruption would not last long.

As governments across the world are considering new strategies to get through present difficulties, Chen held that China has no reason to feel too depressed.

Internally, Chen based his optimistic prospects on increasingly active private and foreign investment propelled by the government.

In addition, the government will step up any necessary measures to bolster domestic consumer confidence, said the paper.

Passimist: export decline under global recession

But Wang Jian, a macroeconomics expert at the commission, was downbeat about China's economic performance in the future.

"If the developed economies are still in recession, China's GDP growth rate will continue to drop this year, " said Wang, deputy secretary-general of the China Macroeconomics Academy.

Despite not having an export-dependent economy, China recorded a decline of quarterly exports last year and its GDP embarked on the same downward track.

"Last year's decline in export was caused by the worsened global economic situation. This year, the world economic expectations are even lower and that resulted in my downbeat judgment," Wang was quoted as saying by the paper.

The World Bank and International Monetary Fund recently forecast that global average growth rate was likely to plummet to 1 percent this year. A benchmark rate of less than 2 percent is a sign that an economy is in recession.

"So we need to change policies to drive our economy forward," said Wang who suggested the state pay more attention to meaty measures to further unlock the consumption potential of the Chinese people.

Wang said that China need more fiscal investment in some major public projects, but monetary measures should be top priorities in the years to come, because various goods in China are still oversupplied.

A recent survey conducted by the State Economic and Trade Commission revealed that some 600 essential goods in China are oversupplied next to present market demand.

Chinese Premier on Economic Priorities in 2002

Chinese Premier Zhu Rongji said on December 20 that China will continue its policy of expanding domestic demand next year. When quicken the pace of restructuring and overhauling the market economy, Chinese people is supposed to have a clear understanding of difficulties and potential problems facing China in 2002.(More)

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