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To: Defrocked who wrote (53037)	7/25/1999 9:27:00 PM
From: John Pitera	Respond to of 86076

Def, Since the Sunday NYT comes out Sat. night it gives that guys at Bloomie's time to read the Times and then Paraphrase for the Bloomberg readers -vbg- nytimes.com In particular, Beijing must figure out how to rebuild the confidence of battered Chinese consumers. For 21 consecutive months, consumer prices in China have fallen. That is because, in economic terms, China is in a deflationary spiral, which means that consumers who are worried about their futures have stopped buying things. The deflation has been aggravated by a huge glut in production capacity. Too many factories are making too many goods, a lot of which do not appeal to China's jaded shoppers. "It's a very worrying set of circumstances," said T.L. Tsim, an independent consultant on Chinese politics and economics in Hong Kong. "Once deflation takes hold, it is very hard to shake off." Tsim said the downward spiral in prices had slowed China's once-torrid economic growth and could hobble it further. It could also derail the radical reforms of China's bloated state-owned industries that Prime Minister Zhu Rongji announced with much fanfare in the spring of 1998. Although China said its economy grew 7.8 percent last year, economists say the real figure was closer to 4 percent. Even the official estimates confirm that growth has slowed each year since 1996. <?b> Maintaining robust growth is crucial in China because with a population of 1.3 billion that expands at 1 percent a year, the country must add at least 7.5 million jobs a year just to absorb the people entering the labor force. And that does nothing to alleviate the existing unemployment rate, which economists estimate at 10 percent in urban areas and 30 percent in the hinterland. Zhu's reform of state industries will necessitate closing down hundreds of inefficient state-owned companies, which could throw millions of workers on the streets. The prospect of these layoffs -- in addition to a loss of benefits and subsidies as Beijing dismantles its Communist welfare state -- has left many Chinese people deeply insecure about their future. "People used to have very little money in their pockets, but most things were allocated by the government," said Ding Junfa, deputy director of the state Administration for Domestic Trade. "Now people's expectations are changing. They are putting money aside." ........