15-JUN-1993 14:11
DEL (UK)
33 1 45249837
P.07
nomic relations argues that the area surrounding the Yellow Sea will come to exemplify the economic interdependence of China, Korea, and Japan [3349].
POLICY REFORMS
Economic reforms in the 1980s contrib- uted to today's impressive growth and the Washington-based CSIS does not expect the policy approach to change much in the 1990s [3416]. They see the Chinese leader- ship emphasizing pragmatic pursuit of eco- nomic development, with diminishing regard for ideology. Although the word 'privatisation' is still avoided, the govern- ment hopes to convert departments en- gaged in commercial activities into decen- tralised corporations, and also proposes to cut the number of state employees by a quarter.
Economic policy will see a shift away from exports of natural resources. As Shyu [3402] points out, the leadership is seeking to increase the importance of intensively processed products, and it plans to boost the export share of finished industrial prod- ucts to 75% by 2000. According to DRI, industry's share of GDP will rise from 52.5% in 1992 to 57.7% in 2000, with agriculture declining from 21.7% to 15.4% over the same period.
There are, however, major issues to be tackled in translating favourable initial conditions into long-term
into long-term sustainable growth.
ILL-ADAPTED INSTITUTIONS
An increasing share of economic activi- ty is no longer subject to guidance through centralised planning. Moreover, the present planning and control process is unsuited to the growing autonomy of the most promis- ing centres of economic activity. The
success of these centres shows up the shortcomings of the state sector and could lead to calls for wide-ranging changes in the institutional framework at national level.
State-owned enterprises pose a particu- larly serious problem not only because they produce large quantities of goods that are not sold, but also because the massive support they receive from the government contributes to inflation. At the same time, removing this support would imply closing down many firms and laying off their em- ployees.
The government thus faces the difficult challenge of reforming the state sector and the administration. However, previous at- tempts at reforming the bureaucracy, such as Deng's 1979 call for wholesale change, met stiff resistance and the same is likely to happen this time too, as regards both the institutions of government and inefficient enterprises.
INADEQUATE INFRASTRUCTURES
Physical infrastructure bottlenecks could be another obstacle to progress, and there will certainly be difficulties in creating the services needed to ensure that the fruits of development are not limited to a few for- eign-oriented enclaves. As regards road transport, it will be impossible to meet economic and social needs fully by the year 2000, and even meeting requirements to a limited extent will require a substan- tial increase in government funding.
The Berlin-based DIW estimates that only 167 billion yuan of the 291 billion required for a limited road transport programune could be obtained from cur- rently available sources. The rest would have to come from the central budget and new or increased levies [1422]. Similarly, the IEA study of the energy sector ques-