Printer Friendly

ADB warns China to cool state-sector economy.

BEIJING, April 28 Kyodo

China should limit state-sector growth instead of relying on interest rate hikes to cool its economy and also strive for balanced growth to help farmers and the unemployed, the Asian Development Bank said Wednesday.

Interest rate increases are a ''blunt instrument'' that hit all sectors, said Bruce Murray, resident representative of the bank's mission in China.

Cooling measures should instead be directed at sectors that show signs of overheating, he said, proposing a real estate development contract tax, deferment of new government projects and a slowing of the conversion of farmland to commercial land.

Without such measures, China could overheat and spark inflation, which would in turn devalue savings and affect consumers in certain sectors, including everyday retail items.

Chinese officials said recently they would consider such measures following the announcement that China's economy expanded 9.7% in the first quarter of 2004 on the year.

China overheated in 1993, causing inflation that lasted until the Asian economic crisis of 1997.

Murray made the comments at a news conference to outline the China segment of the bank's Asian Development Outlook 2004 report released Wednesday.

The report said China overall looks ''robust'' thanks to six years of new fiscal policies and its 2001 accession to the World Trade Organization.

But the potential for overheating, while farmers, workers and some entire regions remain poor shows a growth imbalance, the report said.

China needs a ''rural minimum living standard,'' arable land and better social security to ensure pensions, Murray said. About 900,000 people live in agriculture-dependent rural areas.

Reemployment is also tricky, Murray said, because this process relies on the private sector and the service industry to absorb the unemployed. State sectors, where economic reforms have led to layoffs over the past decade, cannot absorb the unemployed, he said.

China's 2003-2004 government work report released last month notes pledges to help farmers and unemployed people as part of the nation's development.
COPYRIGHT 2004 Kyodo News International, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2004 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Asian Economic News
Date:May 3, 2004
Previous Article:Australia, China to fast-track FTA study.
Next Article:Malaysia voices concern over violence in neighboring Thailand.

Related Articles
ADB sees another Asian crisis unlikely despite downturn.
Asian nations need to jointly fight deflation: ADB.
ADB talks end with upbeat tone on Asian economies.
ADB sees China's economy expanding 8.5% this year.
ADB expects China economy to grow 8.5% to 8.9% through 2007.
3RD LD: China's GDP grows 9.5% in 1st half of 2005.
Asia growth propped against oil price spikes by 2 'tigers': ADB.
Asia growth propped against oil price spikes by 2 'tigers': ADB.
ADB upgrades 2006 growth forecast for developing Asian economies.
Asia's outlook remains strong despite slowdown: ADB.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters