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China and the Asian Crisis: articles and commentaries

Oct 12, 1999. "China Will Achieve 7% Growth This Year, Top Official Predicts," Dow Jones Newswires

"China's retail prices in August fell 2.6% from a year earlier, the 23rd consecutive month of deflation. However, it is a considerable improvement from a decline of 3.5% in May.

" Year-to-year growth in China's gross domestic product slowed to 7.1% in the second quarter of 1999, from 8.3% in the first, causing officials to worry that the full-year growth target of 7% might be unreachable.

" But Beijing has adopted a raft of measures in recent months to spur spending and revive economic expansion. Mr. Zeng said the stimulative policies, which include increases in civil-service pay and state investment, will enable the mainland to attain that goal this year.

" His comments follow a similarly optimistic prediction by the Chinese Academy of Social Sciences. The state-run think tank forecast last week that GDP growth this year will be about 7.6%, and that growth in 2000 will be between 7.5% and 8%."

Sept 30, 1999. Yonghao Pu. "Devaluation Fallacies," Wall Street Journal.

April 9, 1999. James V. Grimaldi and Stephen H. Dunphy. "Wheat growers welcome opening of China market," Seattle Times.

"U.S. growers gained access to China in 1993, but high tariffs have limited sales of Red and Golden Delicious apples. Under a new agreement, duties on apples will be reduced from 30 percent to just 10 percent by 2004.

"The agricultural accord could increase annual U.S. farm exports to China from $1.5 billion in 1998 to $2.4 billion within five years, according to one estimate."

April 8, 1999. James V. Grimaldi. "Big market for Northwest wheat opens: China," Seattle Times.

"In a boon to Washington wheat growers, China today immediately dropped its ban on wheat grown in the Pacific Northwest, abruptly ending a nearly three-decadelong
agricultural dispute."

Mar 30, 1999. "WTO talks with China said to be in final stage," Associated Press, printed in Seattle Post-Intelligencer.

Mar 24, 1999. JEFFREY E. GARTEN. "World would benefit if China part of World Trade Organization," Seattle Post-Intelligencer.

Jan 11, 1999. Renee Schoof. "Key Chinese investment firm files for bankruptcy," Associated Press, Seattle Times.

Sept 28, 1998. Jim Rohwer. "China: The Real Economic Wild Card," Fortune.

"In the war of nerves between bulls and bears, China is the key. If it stays strong, another round of currency collapses can be avoided. But that's an increasingly risky bet.

"BCA China Analyst, a Montreal-based monthly, reckons that a fall in GDP growth to 6% this year would help push the unemployment rate to as much as 12%--which would mean 70 million people without work or unemployment benefits."

Mar 8, 1998. Elaine Kurtenbach. "China easing bank curbs to deal with Asian crisis," The Associated Press, reprinted in Seattle Times.

"To overcome Asia's financial upheavals, China is stepping up investment, easing controls on banks and getting its finances in order, the country's top banker said yesterday.

"Central-bank governor Dai Xianglong said China would tap its underdeveloped market of 1.3 billion people to weather the Asian crisis, while avoiding moves - such as a depreciation of its currency - that might worsen the situation elsewhere.

"The economic turmoil in neighboring countries has dimmed prospects for China's exports and foreign investment at a time when its own growth is slowing and millions of workers are losing their jobs in downsizing state-owned industries."

Jan 15, 1998. Seth Faison. "Chinese Economic Leaders Read a Warning in Asian Crisis," New York Times.

"But the pressures on the Beijing authorities are strong. Their banks are saddled with untold billions of dollars in bad debt and are caught in a wrenching shift from a planned economy to one driven by market forces. Should depositors lose confidence in China's state-run banks, which depend on the nation's 40 percent savings rate to function, the financial system could falter.

"This year, China is trying to engineer a big selloff of state industries, and there is a pressing need for domestic and foreign investment, both of which seem to be receding. Should the financial crisis spread to China, tens of millions of urban workers may well be unemployed."

Jan 2, 1998. "Taking China's pulse with the Hong Kong flu," Seattle Times editorial.

"The central government in Beijing surprised the Hong Kong banking and investment community by suggesting Hong Kong itself was best able to gauge its own response to the regional economic tremors.

"Mainland officials also pledged to back the Hong Kong dollar with huge cash reserves to fend off currency speculators."

Nov 24, 1997. Neel Chowdhury and Anthony Paul. "Where Asia Goes From Here," Fortune.

"China, conspicuously immune so far during this crisis, won't escape unscathed either. Beijing's industrial modernization drive is largely financed by investors from Hong Kong, Southeast Asia, and Taiwan--where many companies suddenly have less capital to put into the mainland. Adding to the squeeze, sharp currency devaluations are making such countries as Thailand and Indonesia more formidable export competitors to China. Thailand's 54% surge in exports in September may well be a hint of what lies ahead for the region as a whole."

Oct 25, 1997. Political and Economic Risk Consultancy, Ltd. A risk report.

"Chinese country risks continue to edge downward. The recently held 15th Party Congress did not consolidate Jiang Zemin's position as much as many seem to assume. Rather, it showed he has been able to strike enough alliances of convenience to assure that his leadership will not be openly challenged within the next six months. He has been able to get this support, however, not through strong-armed tactics that have bent others to his view of what the government's policy mix should be. Rather, he has modified his own position and is now embracing many of the policies espoused by those who were seen to be his rivals.

"One big challenge for the Chinese leadership in the short term probably lies in its ability to continue to attract foreign investment into the country in sufficient amounts to sustain modernization momentum. Direct investment has already showed signs of weakening this year. In recognition of this, Zhu Rongji announced that some investment incentives for foreign companies that were abolished last year will be reintroduced. In particular, import tax breaks on equipment needed by investments are likely to be restored on a case-by-case basis.

"The continued inflow of indirect investment capital into China also cannot be taken for granted. Hong Kong's share market, which is the main vehicle through which this capital is being raised, is bound to suffer setbacks periodically. Some of them -- such as the plunge on October 23 -- could be very steep and quite prolonged, which would be bad news for a China which has grown dependent on this well of funds. The landmark listing of China Telecom (Hong Kong) was not received nearly as favorably by investors as had been hoped, and it will now be much more difficult for other Mainland companies hoping to raise funds in Hong Kong. China United Telecommunication (Unicom), for example, may be deluding itself if it thinks it will have no trouble raising US$3.6 billion over the next three years, as it says it wants to do. Despite State Council backing, Unicom has not been able to pose a credible challenge to the MPT's dominance in China, and China Telecom's ability to move onto the world stage so successfully and aggressively could make it even more difficult for Unicom to be taken seriously in China."

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This page was last revised on October 12, 1999.