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Chinese Economy Expected to Grow 7.5 Percent This Year
The Chinese economy is expected to grow 7.5 percent this year, and increases of 7.8 percent and 7.6 percent are forecast for 2001 and 2002, respectively, according to a United Nations report released in Beijing Monday.
Inflations for 2000, 2001 and 2002 are estimated at zero, 1.1 and 2.3 percent, respectively, said the report on the Economic and Social Survey of Asia and the Pacific 2000 launched by the UN Economic and Social Commission for Asia and the Pacific (ESCAP).
China's gross domestic product (GDP) grew by 7.2 percent in 1999, marginally down on 7.8 percent in 1998.
The country remains one of the fastest-growing economies both in the ESCAP region and in the world as a whole, the report said.
The slippage in the growth rate in 1999 was the result partly of domestic factors, such as weak consumer demand, and partly the result of the crisis-induced reduction in foreign demand in the region. The main stimulus to growth was provided by government investment expenditure, the report noted.
China has weathered the effects of the economic crisis in Asia rather well, according to the report.
Meanwhile, the UN report affirmed China has successfully solved some of its financial problems, spurring healthy development of the sector.
Although there is a significant problem of non-performing loans in China, the institution of reforms of the State-owned enterprises (SOEs) and setting up of asset management companies for major State banks have prevented the severe credit crunch experienced by a number of other economies in the Asia-Pacific region, the report said, adding that low interest rates have assisted in the process.
Given the relatively low ratio of public debt to gross domestic product (GDP), resolution of the non-performing loan problem and recapitalization of State-owned banks should not pose a major fiscal burden, the report noted.
Supervision and regulation of the financial sector has been considerably tightened during the last two or three years.
However, durable solution of the non-performing loan problem affecting banks is not possible without reform of the SOEs, the report pointed out.
A total of seven Chinese financial institutions have become members of the Institute of International Finance (IIF), including Bank of China, Bank of Communications, China Construction Bank, China Development Bank, China Everbright Holdings Co., Ltd., China Merchants Bank and China Minsheng Banking Corporation.
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