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To: ms.smartest.person who wrote (281)	2/7/2001 9:03:57 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

Rosy 2001 forecast for mainland,HK growth By LI WENFANG The US investment bank Lehman Brothers has given a bullish economic forecast for the mainland and Hong Kong this year, but projects a steep slowdown in Asia's economic growth. Asia, excluding Japan, is expected to have a 5.7 per cent growth in its gross domestic product (GDP) this year, down from the 7.5 per cent last year, said Paul Sheard, Asian chief economist of Lehman Brothers. Behind the Asian downturn are high oil prices, falling chip prices, widespread political uncertainty, depressed stock markets, capital flight and a general loss of business and consumer confidence, Sheard said at the bank's economic conference yesterday. However, outlook for Hong Kong and the mainland is bullish for being less exposed to oil and high value-added electronics. Hong Kong will benefit "immensely" from China's entry into the World Trade Organization and lower interest rates in the United States, he said. Lehman Brothers forecast a 7.4 per cent GDP growth for the mainland and 5.9 per cent for Hong Kong, down from the mainland's 8 per cent and the SAR's 10.1 per cent last year. Although foreign demand is expected to weaken further, the mainland will still be able to sustain a two-digit growth in exports this year, Sheard said. "Chinese exporters are rapidly moving up the value-added ladder into growth areas, such as consumer electronics, and are successfully gaining market share because of their still cheap yet skilled labour," said a Lehman Brothers report. Furthermore, the mainland economy is relatively insulated, with exports accounting for 25 per cent of its GDP, compared with over 40 per cent for most of the other Asian economies. Domestic consumption and investment, the challenge for the mainland this year, have been recovering and have successfully filled the hole of weakening exports, said the report. The mainland's industrial production rose 11.4 per cent last year, the largest growth since 1997. Retail sales growth also picked up, to 9.6 per cent year-on-year in October to November last year from the 8 per cent in same period in 1999. Fixed-asset investment climbed to 12.2 per cent in the two months last year from 6.9 per cent a year before. Lehman expects the growth of the consumer price index to be 0.5 per cent this year, up from 0.3 per cent last year. Lehman Brothers predicted further expansion in consumption and investment in Hong Kong this year. Consumer spending is expected to pick up with a falling unemployment rate, surging visitor arrivals and improving consumer confidence, thanks to the US interest rate cuts. Business investment has improved, with lower gearing ratios and rising domestic and foreign sales. The information technology revolution has led to a rush of new business start-ups and increasing investment for IT technology by all industries. chinadaily.com.cn