Mainland growth 'hit by failure to apply reforms'

PUBLISHED : Wednesday, 19 May, 1999, 12:00am
UPDATED : Wednesday, 19 May, 1999, 12:00am

The mainland's economic growth was being impaired by a failure to carry out thorough reforms of state enterprises and the financial sector, the Organisation for Economic Co-operation and Development warned yesterday.

'Major questions' remained about whether the reforms were broad enough or whether recent successes were sustainable, the OECD said in its twice-yearly Economic Outlook report.

It said Hong Kong's economy would see no growth this year but rebound to four per cent growth in 2000 as recovery in the rest of the region took hold.

The SAR was still vulnerable to external turmoil, although the banking sector remained sound and financial-market confidence appeared to have returned.

Mainland state banks were still being directed to make loans to troubled enterprises, which meant a continuing rise in bad debts was inevitable, it said.

State enterprise reform, which saw the loss of 660,000 textiles jobs last year, also did not appear to go far enough.