China growth pains

Sunday Money welcomes letters to the editor. However, we reserve the right to edit them. All correspondence must carry the author's name and address, not necessarily for publication.

THE article 'China growth has slumped, says World Bank report' (Sunday Money , October 6) by Peter Seidlitz and David Murphy, misrepresents my recent remarks on the Chinese economy for European Union Ambassadors in Beijing. I regret neither journalist spoke to me to verify the information they obtained.

The World Bank has not changed its assessment of China's excellent macroeconomic performance in recent years. Growth in the second half of 1996 may be somewhat lower than in the first half because of the reported build-up of unsold inventories, but this is part of a normal adjustment process and no cause for alarm.

Our concerns about pressing problems in many State Owned Enterprises (SOEs) and in the financial sector are a matter of public record. These concerns are shared by the Chinese Government.

The recent increases in urban unemployment in some areas with a high concentration of problem SOEs is indeed a new phenomena, but a figure of 30 per cent is grossly exaggerated and was never mentioned by me.

It is as much a new problem and a new challenge as it is a reflection of painful but actual reforms that are being carried out at the level of SOEs in many parts of China.