China's Rural Population Expected to be under 25 Percent: Economist

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Last updated at: (Beijing Time) Sunday, May 19, 2002

China's Rural Population Expected to be under 25 Percent: Economist

The rural population in China is at present not up to 85 percent and it is estimated to be around 60 percent. However, for China to be an economic power it is necessary to lower its rural population to be under 25 percent.

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At the IBM Forum recently held in Guangzhou, Steven Cheung, an economist addressed it with a speech centering on the challenges brought about by China's entering into the World Trade Organization.

After he acquired his doctoral degree in the US California University Dr. Cheung was appointed the president of the US Western Economic Association (WEA) and he is, as predicted, very much likely to become a first American-Chinese to get the Nobel Prize in economics.

According to Dr Cheung, the agriculture is the most vulnerable sector to the influence of the WTO. The rural population in China is at present not up to 85 percent and it is estimated to be around 60 percent. However, for China to be an economic power it is necessary to lower its rural population to be under 25 percent.

In the United States, it sees a rural population of 7 percent while that in Taiwan is around 15 percent. So it's not very difficult for China to reduce it to some 25 percent of the of total.

Many people think this is not possible but Dr. Cheung deems it not quite difficult. The crack of the matter lies in the land area of the Chinese mainland in which the area for industrial use turns out a higher value of repayment than that from agriculture, an estimation of 10 times that for agricultural use.

Since such is the case it is naturally to turn it into industrial use, as the local governments are very pleased to do so. No matter how big a support the agriculture is offered the local governments like to turn the land into industrial use, and so Dr Cheung holds that the land for agricultural use will see a gradually diminishing trend.

Many people also think that the Chinese people will no longer buy homemade cars due to China's entry into the WTO. About this, Dr. Cheung is of opinion that from a long-term point of view the homemade cars enjoy a bright future. However, it should follow the line of a low price should the automobile industry want to survive.

The foreign investors in China hold that if the Chinese government can lower the import-duty of auto-accessories, the foreign invested companies will be sure to turn out cheaper autos in China than in the outside world. He's beyond doubt that it is possible for the cars manufactured in China to be sold to southeast Asian countries nor is it strange for them to be sold in the US market.

Speaking of the financial sector, it is necessary for the People's Currency to become an internationally convertible currency or it will be neither fish, flesh nor fowl. To turn it into internationally convertible currency depends on international financial centers. So China has to open up its financial market and lift the ban on the control of foreign exchange and there is no other way out. He says, it's not necessary to get prepared before the lift of the ban on foreign exchange, absolutely not necessary. It's possible to do so right from the very beginning and the more you are going to get prepared the more troubles you'll come across.

Dr Cheung is of the opinion that to lift the ban on foreign exchange control, if it is able to control the money flow this will help ensure the people's currency to become a very hard currency in the 21 century. Many people are concerned that if the ban is lifted the money will flow outside without the stopping of it. People holding such a view are by no means in the few.

Nevertheless, Cheung says, you are in the wrong. For what are people bringing the money out? For investment! If China set free the control on foreign exchange, then for those world foreign banks, is there anywhere else in the world that poses a better investment opportunity for them than in China? Should China go to open wider its financial market by lifting the control on foreign exchange, Cheung says assuredly, Shanghai is bound to overtake Hong Kong within five years and the Shanghai area will become an ever so prosperous financial center of the world in some 20 years to come.

By PD Online staff Han Rongliang

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