15-JUN-1993 14:11
DEL (UK)
33 1 45249837
P.06
CHINA'S ECONOMIC FUTURE: CAN GROWTH BE SUSTAINED?
An OECD report on the so-called Chi- nese economic area, comprising China, Taiwan, Hong Kong, suggests that by 2030 this region might account for 12% of world GDP and 20% of world trade [0301]. The report assumes that China's real GDP will grow by 7% p.a. over 1990- 2030. Projections by DRI are on broadly similar lines, seeing China's real GDP growing by almost 8% p.a. over 1993-2000 [1401], with industrial production doubling over the same period.
The Chinese government's target is to expand GNP to four times its 1980 level by the end of the century [3420]. Given that this requires only 6% p.a. average growth in the 1990s, China is in a unique position for a communist country in that independent observers project growth levels higher than those set by the leader- ship itself. This issue of Highlights exam- ines the factors underpinning the optimistic outlook for the Chinese economy and reviews policy issues which will have to be resolved if growth is to be sustained.
ABUNDANT RESOURCES
China has a population of over 1 billion people, projected to reach around 1.3 billion by the early 21st century. While this does pose a serious challenge to the country's carrying capacity, it also pro- vides abundant human resources for eco- nomic development and constitutes a vast potential market. Per capita GDP is expect- ed to more than double to $1000 (at cur- rent rates) by the end of the decade [3521], but many analysts argue that this calcula- tion seriously underestimates real purchas-
ing power because it is heavily biased by depreciation of the yuan against the dollar.
Natural resources are plentiful too. Coal reserves are around 170 billion tons [2759], and preliminary estimates suggest that oil reserves in the Tarim basin, al- though this is a very remote region, are promising, perhaps 10 billion tons accord- ing to the China National Petroleum Cor- poration. The country also has large re- serves of other important resources, e.g. 36 million tons of rare earths out of a world total of 45 million tons. Iron ore mining capacity will more than double to 145 mil- lion tons metal content over 1989-2000, making China the world's third largest pro- ducer.
DYNAMIC REGION
Cooperation with outside partners is being encouraged to build on the advantag- es of the world's fastest-growing region. This translates into a strategy based on China's labour and natural resources, Taiwan's capital and technical and mana- gerial know-how, and Hong Kong's inter- mediation services. Chinese people living in other countries such as Singapore also provide a useful network of contacts.
Interdependence among Chinese coastal regions is expected to grow and bilateral ties with particular partners, e.g. Fujian with Taiwan, could strengthen in line with a trend towards greater economic integra- tion in Southeast Asia. On a wider scale, China is well placed to act as a develop- ment hub for the entire region, and a World Bank analysis of Sino-Japanese eco-
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