China
ebnonline.com
Wednesday, January 2, 2002
China may be heading for optical glut
By Jack Robertson
EBN
(12/31/01, 01:18:43 PM EST)
The China Ministry of Information Industries has bad news for suppliers of optical fiber telecommunications equipment: China may be joining the rest of the world in an oversupply of optical networks.
A panel of experts told the Ministry that a rush of foreign and domestic suppliers into the China market threatened to create a glut that could have a similar devastating impact as in the rest of the world.
The panel said there are currently 10 plants in China alone building fiber optic transmission equipment. That could lead to annual production in China of 35 million kilometers of fiber by 2004, although demand then will be only 20 million kilometers.
The Ministry itself put out a forecast that warned starting in 2002, there could be a surplus of fiber production in China.
The panel urged the China government to take measures to cull back the rampup of fiber cable and equipment production.
Foreign suppliers could be especially hard hit. The China telecommunications infrastructure market has been one of the few bright lights in an otherwise dismal global market. Should China become saturated, that could disrupt the last remaining strong global infrastructure markets.
The Ministry of Information Industries predicted that by 2005 China's optical communications market would total $5.14 billion for optical transmission equipment, or 12.4% of the global market. Optical and electronic devices for the market would total $2.7 bilion, also 12.4% of the world market. Fiber optic cable would total $1.6 billion, or 11.3% of the global market.
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interactive.wsj.com
January 2, 2002
China's Economy Feels Weight
Of Weak Overseas Demand
By PETER WONACOTT
Staff Reporter of THE WALL STREET JOURNAL
BEIJING -- China is feeling the pinch of its increasing ties to the global economy, with sluggish overseas demand dragging down economic growth and worrying government officials.
The government's National Bureau of Statistics has estimated that China's economy grew by 7.3% in 2001. Although the bureau didn't release quarterly figures, the annual rate, while high compared with most major economies, indicates that fourth-quarter growth slipped to about 6.5%. That is the third quarterly decline in a row and means that growth has now fallen below the level the government says is needed to create enough jobs for new workers as well as those laid off from struggling state enterprises.
Making matters worse, prospects for a quick turnaround seem dim, with China's biggest markets -- the U.S., Japanese and European economies -- still anemic. A weakening yen is also making Chinese goods less competitive in overseas markets. China's exports rose about 6.3% for the year, compared with a 27.9% jump in 2000 and, according to analyst estimates, increased only about 2% in the fourth quarter.
"Talk in the government is that the impact of this slowdown may be greater than the Asia financial crisis," said Wang Yuanhong, a senior economist at the State Information Center, a government think tank. Because of the typical six-month lag between orders and shipment of goods, Mr. Wang says the economy still hasn't felt the full brunt of the recession in the U.S., which alone buys about one-fifth of Chinese exports.
The slowdown has highlighted political perils facing China's leaders. Although the government gloried in joining the World Trade Organization last month -- an occasion state media rated as the top news story of the year -- membership requires a challenging array of economic reforms.
Beijing now must lower import tariffs and allow foreign companies into once-closed areas such as telecommunications and financial services. The result is expected to shake up state industries, challenge banks, threaten an already impoverished farm sector and worsen unemployment -- all while the leadership attempts to keep a lid on social unrest.
The ferocity with which China has fought recent trade battles, including an eight-month spat with Japan over farm exports, has underscored the stakes Beijing sees in preserving overseas markets while its own is pried open.
To that end, President Jiang Zemin said in a New Year's Eve speech that China wouldn't shrink from the challenges of being part of a globalizing economy. Mr. Jiang, who hopes success internationally will help the government's popularity at home, said WTO entry will bring a new round of reform. "China will, in an ever greater scope and deeper level, participate in global economic cooperation and competition," Mr. Jiang said in the speech carried on state radio and television.
Mr. Jiang also pointed to an accomplishment recession-hit neighbors haven't managed: sturdy growth amid global doldrums. A deficit-spending program led by a state sector already deep in debt has fueled most of that investment growth. Fixed-asset investment rose 16.3% for the January-November period, according to the statistics bureau. Analysts expect Beijing to continue the spending program this year despite a dwindling number of investment-worthy projects.
Still, some see signs that government spending -- along with wage increases for civil servants -- spurring domestic demand and thereby reviving growth even without a strong rebound in exports.
China's retail sales were up 10.3% in the October-November period from a year earlier, according to Pu Yonghao, who tracks the Chinese economy for Nomura International (Hong Kong). That pace is up from 9.8% in the preceding quarter despite falling stock prices and worries about job losses. "People aren't throwing money around at night clubs or karaoke," he said. "But they're spending, and the demand seems resilient."
Write to Peter Wonacott at peter.wonacott@wsj.com |
