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Thursday, December 3, 1998

Chinese economists split over growth target for next year 

REUTERS  
Beijing, Dec 2: Chinese economists on Wednesday proposed different economic growth targets for 1999, but they agreed that China needs to deepen economic reforms amid the Asian financial crisis.

"It's appropriate for China to target economic growth between 6.6 per cent and 7.2 per cent next year," said Dong Xianfeng, an economist at the Peking University.

China's gross domestic product grew a year-on-year 7.2 per cent in the first nine months of this year, off Beijing's target of 8.0 per cent this year and actual growth of 8.8 per cent in 1997.

Many economists have argued that in the face of the regional crisis, 7 per cent growth was not bad and that Beijing did not have to risk embarrassment by setting an overly ambitious target.

"Sheer growth is not the most important thing," Dong said in a telephone interview. "We should put more stress on the quality of economic growth."

The government should deepen ongoing economic and financial reforms to reduce industry overcapacity and ward off potentialrisks, he said.

Chinese officials have said China must maintain relatively high economic growth to absorb millions of surplus workers laid off by ailing state firms. But Dong disagreed.

"Economic growth generated by infrastructure investment could mainly help employ farmers rather than urban residents," he said. Surplus farm labour often gravitates to highway and rail construction.

He estimated that an increase in China's GDP by one percentage fuelled by infrastructure spending could help create 890,000 new jobs, instead of 1.25 million forecast by some officials.

Beijing has kicked off a massive infrastructure investment plan this year aimed at stimulating the faltering economy.

The China Economic Times quoted a senior government economist as saying that China should set an 8 per cent economic growth target for 1999, unchanged from this year's.

"For China, 8 per cent is not a high growth rate," the newspaper quoted Liu Fuyuan, director of the Economic Research Institute under the StateDevelopment Planning Commission, as saying.

"Setting a growth target of 8 per cent next year and striving to achieve it will help meet the need of stabilising the economy and carrying on policies adopted in 1998," he was quoted as saying.

"If economic growth is lower than that rate, things will get harder," he said.

He warned that cutting the growth goal to 7 per cent would dampen people's confidence.

On Thursday, the Futures Daily quoted Chinese economists as calling on Beijing to scale down its economic growth goals next year amid the Asian financial crisis.

The newspaper quoted economists as saying that Beijing should set a slightly more modest target for next year of "guarantee seven, strive for eight".

Chinese officials have repeated a mantra of "guarantee eight" -- or eight per cent growth -- this year.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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