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China's Economy Set to Grow by Eight Percent in 2000: ADB
The Asian Development Bank on Tuesday painted a rosy picture of China's economy, predicting growth of eight percent this year on the back of strong exports and domestic consumption.
The Manila-based bank said it had revised its estimate for gross domestic product (GDP) growth for the year up from 7.5 percent in September following strong economic figures in the first nine months.
However the bank also warned in its annual country economic review for China that 230 million people or 18.5 percent of the population were living in poverty, defined as existing on less than one dollar per day.
"Fueled by strong exports and domestic consumption, the People's Republic of China is likely to grow by a hefty eight percent in 2000, regaining pre-crisis levels," said Min Tang, the ADB's chief economist in Beijing.
China's economic growth last year of 7.1 percent was its lowest since 1991 and the economy battled to stave off the ravages of the Asian financial crisis.
The turmoil in currency and stock markets which erupted in July 1997 saw Chinese economic growth fall from 8.8 percent in 1997 to 7.8 percent the following year.
As regional economies pulled out of the slump, China's exports to Asia have surged. The ADB predicted a 20.6-percent rise in Chinese exports for the year compared to a rise of just 6.1 percent last year.
The ADB also pointed to stronger domestic consumption.
"After slowing for six consecutive years, retail sales grew by 9.9 percent in the first three quarters of 2000, compared with 6.8 percent in 1999," said the report.
"The fiscal stimulus packages and interest rate reductions are now having a positive effect on domestic consumption," it added.
The ADB predicted China's economy would grow between 7.0 and 7.5 percent each year from 2001 to 2003, and said the country's accession to the World Trade Organisation (WTO) in the coming months could in the long term boost economic growth by between one and two percent per year.
But the report said that in the short term China's WTO commitments to slash tariffs, liberalize investment and open up domestic sectors to foreign competition could be painful and would require major structural adjustments.
It warned that reforms of China's state sector were creating new unemployment and a rise in urban poverty which would become a major challenge for the government.
"The social safety net needed to prevent many of the laid-off workers from becoming extremely poor has yet to developed," it said.
Alongside the 18.5 percent of China's 1.3 billion people living on less than one dollar per day, the report said nearly 54 percent survived on less than two dollars per day.
The Chinese government announced last week it had virtually eliminated "absolute poverty" -- it said a figure of 22 cents per day was enough money in rural China to have enough to eat and wear, and a place to live.
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