Planners expect credit crunch

PUBLISHED : Friday, 28 October, 1994, 12:00am
UPDATED : Friday, 28 October, 1994, 12:00am

A CREDIT crunch will hit China's Ninth Five-Year Plan, which covers the crucial period of 1996 to 2000.

Chinese sources said while senior economists and cadres had started mapping out rough contours for the plan a few years ago, they were obliged to make major adjustments in the light of new restrictions, particularly the high inflation rate and the dwindling state coffers.

They said the growth rate for the Ninth Five-Year Plan period would be at least a few percentage points lower than that during 1991 to 1995, which averaged more than 10 per cent.

A dispatch by the semi-official Hong Kong China News Agency last night said the speed of development in the new plan would be 'adequately lower' than during the Eighth Five-Year Plan period.

Quoting the departments concerned, the agency said financing for key projects in the second half of the decade would be tight.

It said about 45 per cent of the state investments for infrastructure would be used to cover unfinished projects in the 1991-1995 period, or to improve upon them.

This meant that at the central and local levels, administrations would have to look to the non-state sector and foreign corporations for investments.

Moreover, the bulk of state investments would be made according to the newly announced national 'production strategy'.

The strategy says priority will be given to agriculture, transportation, energy and raw materials sectors and to helping remote and disadvantaged regions.

Chinese officials have indicated the objective of the Ninth Five-Year Plan would be the same as that outlined last year by politburo leaders - 'maintaining a balance and equilibrium between reform, development and stability'.

While a speedy growth rate would be sought, it had to be achieved on the basis of 'continuity and health' as well as productivity.

The news agency reported the State Council hoped that by the year 2000, the per capita share of the gross national product would probably be about US$1,300 (HK$10,000), based on 1980 prices.

The agency disclosed that maintaining the stability and prosperity of Hong Kong and Macau also figured prominently in the plan.

'In view of the priority of fighting inflation, the high-growth model once advocated by [patriarch] Deng Xiaoping has been neatly forgotten,' said a Beijing economist.

He said responsibility for fine-tuning the Ninth Five-Year Plan rested with a team headed by Vice-Premier Zhu Rongji.

The details of the plan are expected to be heatedly debated in the run-up to the plenary session of the National People's Congress next March.