China's economy must not get into the rut of Latin American countries: NPC deputy

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Last updated at: (Beijing Time) Tuesday, March 09, 2004

China's economy must not get into the rut of Latin American countries: NPC deputy

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"We should prevent China's economy from being Latin Americanized," warned Fu Hanxun, deputy of National People's Congress and vice chairman of Guangzhou municipal people's political consultative conference at Guangdong group on Mar. 7.

Fu noted that transformation in China's economic strategy should be underway by now and an important symbol of the transformation is the change from seeking for economic aggregation to quality.

Over the 25-years' reform and opening-up, China has always been laying stresses on the rate and quantity. At the present moment, China is again facing a turning period of strategic opportunity in which its major task is to build a well-off society. It is very important to stick to the concept of economic quality, coordinated and scientific development. Premier Wen Jiabao stressed in the government work report that scientific concept of development bears great and profound significance to China's economy, Fu said.

Fu said that in the 1980s and 1990s the Latin American countries practiced an introducing policy for economy with their GDP (Gross Domestic Product) to increase continuously. European and American countries shifted their processing industries to Latin American countries, especially Brazil and Argentina, to further control their economy, energy resources, automobile and power. Since Latin American countries are lack of profit and asset transmission laws etc, and in the end Latin American countries were controlled by European and American countries though with some growth but not development.

As China strengthened its reform and opening-up in late 1990s, some Western countries also moved their processing industries to China. This removal has directly led to the economic collapse and deterioration of the people's living standard in Latin American Countries.

Are the Chinese enterprises or foreign ones the dominant economy in China? Fu asked. Should African leaders recognize some 20 years later the importance and necessity of political stability and opening-up and the introduction, African labor will be much cheaper than ours. Does it constitute any risk for us to be Latin Americanized? Foreign capital is dominant in those countries such as Brazil, 92.7 percent, with domestic enterprises completely marginalized. During the 25-year reform and opening-up, foreign enterprises have been given "super-national treatment" status in China while the domestic ones the other way round, "non-national treatment. "

Should the basic policy remains the same in 20 years to come and we are faced with a new opportunity for development, Chinese private enterprises will definitely be marginalized because they have no room or strength for development.

Guangdong has become a world-processing center, Fu said, and China is a big processing country. Is a big processing country the same as a big processing workshop? No. A big processing country should have its own brands and intellectual property rights, or otherwise it is only a "processing workshop." The 60 percent of the Chinese foreign trade have to depend on foreign countries. Last year China's foreign trade economy reached over 800 billion-yuan with 60 percent from processing industry economy and all of them are controlled in the hands of foreign capital. Additionally, 51.2 percent of export in manufacturing industry are from joint ventures. As China's economy depends heavily on foreign capital, foreign trade, if breaking the bounds of the state control someday it presents a threat to the nation's economic security.

Fu said, we've seen the same case in domestic trade and logistic giants flocking into China. They have already come to form a monopoly grip. Should our foreign trade, domestic trade and logistics be controlled by foreign capital, the nation's economic security would be in jeopardy.

Fu added that it is very important to stick to the concept of scientific and coordinated development in economic aggregation and quality. Guangdong proposed to speed up private economy and reform of State-owned enterprises. The economy in Guangdong has already set out for a great transformation and it is now at a critical juncture. Enterprises can not solve the problem of being marginalized and the nation's economy to be like Latin American countries and they have to rely on the management mechanism and innovation mode of the government. The enhancement of the Chinese enterprises' competitiveness should depend not only on the enterprises themselves but also on the management of the government or even on the value orientation.

By People's Daily Online

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