Zhu Rongji

Outlook in China 'good' for investors

PUBLISHED : Wednesday, 18 March, 1998, 12:00am
UPDATED : Wednesday, 18 March, 1998, 12:00am

Now is a good time to invest in the mainland because its economy, cooled by the government's sustained austerity programme, is in a 'completely different cycle' from other, bombed-out Asian economies, according to Cheah Cheng Hye, managing director of Value Partners.

Mr Cheah said yesterday the mainland economy was the first in Asia to overheat and would have collapsed but for the strict policies implemented by Zhu Rongji, then governor of the People's Bank of China.

Mr Zhu, elected premier yesterday, imposed an International Monetary Fund-style austerity regime, and as a result, the mainland's economy 'is where Korea and Thailand might be three years from today', Mr Cheah said.

He said the bear market brought on by Mr Zhu's tough programme had already lasted four or five years, pushing many share prices down 40 per cent or 50 per cent from their peaks.

He dismissed outgoing premier Li Peng's 10 per cent growth target for investment in fixed assets and instead put his faith in central bank governor Dai Xianglong's expectation that such growth could reach 15 per cent.

Strong investment in fixed assets could keep overall economic growth on track.

Mr Cheah also discounted fears that the yuan might be devalued.

He said strong foreign-exchange reserves and low foreign debt made the mainland's situation 'totally different' from those of stricken economies in Southeast Asia.


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