China Casts Shadow of Asian Financial Crisis

While the economy of many Asian countries is showing initial signs of recovery, China's economy has spiraled up for quite a long period.

Chinese Premier Zhu Rongji said at the 21st Century Forum held in Beijing this month that "China's economy has freed itself from the impact of the Asian financial crisis and is showing signs of improving".

Many economists fully endorsed Zhu's viewpoint. They agree that China's economic growth has reached its best stage. This has been verified by new figures released by the State Statistical Bureau.

In the first five months of the year, China's export soared 36. 8 percent to reach US$ 92.3 billion compared with the figure a year ago, setting a record high since 1997. The gross domestic product registered an 8.1 percent rise on the basis of an 8. 3 percent growth during the same period last year.

Shi Wanpeng, vice minister of the State Economic and Trade Commission, attributed the good economic performance to a series of macro-control policies taken by the central government.

During the Asian financial crisis, China's exports dropped from a 20 percent growth rate in 1997 to 0.5 percent in 1998. The amount of foreign investment in China also dived to its lowest point in the previous two decades.

In the wake of depreciation of currency in many Asian countries, the Chinese government made a bold decision of keeping its currency, the Renminbi, stable. It later adopted a series of macro- control policies including measures to lower interest rates of bank loans and issue more state bonds.

Although China saw a drastic drop in exports, the macro-control measures have stimulated domestic demand and promoted exports. China's economic growth rate was therefore faster than other Asian countries, said Zhou Tianyong, a Chinese economist.

China's economy showed signs of recovery in the latter half of last year. A slump in exports gradually saw an increase to 6.1 percent at the end of the year.

The Chinese government has continued to pursue an active financial policy this year. It has launched a nationwide campaign to accelerate the development of its western regions and made positive measures to become a WTO member. These factors have lead to a significant growth in investments, exports and consumption.

In addition to steady growth in export and commodity retail sales, the industrial sector has improved greatly. In the first five months of the year, industrial enterprises across China gained a profit of 125.4 billion yuan, 1.3 times more than the same period last year.

A number of well-known politicians and economists said China's success in dealing with the negative impact of the Asian financial crisis has set a good example for other countries in maintaining economic stability.

Lawrence Klein, winner of Nobel Economics Prize, said it is time to regard China as the most important country in Asia. Favorable economic growth has inspired the confidence of foreign investors to China. A total of 7,700 foreign-funded projects were approved in the first five months, bringing in US$ 18.2 billion, up 25 percent over the year-ago period. According to the China Economic Monitoring Center, the confidence index of Chinese consumers had kept rising in the first five months and it climbed to 95.2 points in May.

Qiu Xiaohua, deputy director of the National Bureau of Statistics, said that China's economy will continue to be stable. Its economic growth rate this year is expected to be higher than the 7.1 percent rise last year. Economists at home and abroad predict that China's growth rate will be 7.5 percent this year.

However, Chinese leaders have repeatedly noted that there are also some problems. The slow restructuring of China's economy and poor domestic demand are two such problems. China will strengthen reforms and revitalize the country by promoting and developing science and education.



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