Turmoil may shrink exports
RENEE LAI in Beijing
The mainland could report negative export growth this year as the impact of the Asian financial crisis becomes more serious, according to Vice-Finance Minister Gao Qiang.
Export growth was unlikely to see any significant improvement next year, Mr Gao said. The bleak export outlook would force Beijing to continue an active fiscal policy which he described as a short-term measure to bolster economic growth.
The state could not rely too heavily on domestic debts to fund the infrastructure investment spree, he warned.
'It will not be bad if we can achieve zero export growth this year,' Mr Gao said yesterday at the China Economic Development Forum in Beijing, organised by the Academy of Macroeconomic Research and BNP Prime Peregrine Securities.
In the first 10 months of this year, export growth was a meagre 1.3 per cent.
Mr Gao said the mainland's economic task next year was to stimulate domestic demand.
Beijing has issued 100 billion yuan (about HK$93.03 billion) in treasury bonds for infrastructure investment, backed by 100 billion yuan in new bank credit, to achieve its target of 8 per cent economic growth this year.
Mr Gao said outstanding domestic debt was expected to be 10.3 per cent of this year's gross domestic product, or 13.6 per cent if the special T-bonds were included. This was low by most countries' standard.
The budget deficit was 2.2 per cent of this year's GDP, below the international danger level of 3 per cent.
'But we are also clearly aware that our fiscal income only accounts for a very low portion of GDP, so the government cannot issue too much domestic debt,' Mr Gao said.
The active fiscal policy was a temporary one to counter the adverse effect on the national economy of the Asian crisis and the problem of insufficient domestic demand, he said.
'However, this policy could not be implemented for a long time.' He said the government had invested primarily in short-term infrastructure projects such as those under construction or new ones to be completed within one to three years.