Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : News Links and Chart Links -- Ignore unavailable to you. Want to Upgrade?

To: pallmer who wrote (4452)	12/30/2002 9:14:57 PM
From: Softechie	Respond to of 29600

Sell QCOM! China's Economy Grows 8%, But Signs of Weakness Loom By PETER WONACOTT Staff Reporter of THE WALL STREET JOURNAL BEIJING -- China's economy expanded 8% this year, powered by government investment and strong export growth that defied a global slowdown. But with its budget deficit growing and trade flows expected to taper off, Beijing faces something new: an economy that appears poised to lose some steam next year, economists say. In a briefing Monday, the top official at the National Bureau of Statistics said the total value of goods and services China produced, or gross domestic product, amounted to $1.232 trillion this year. In 2001, economic growth was 7.3%. Statistics-bureau chief Zhu Zhixin added that industrial output in 2002 rose faster than it has in years, surpassing 12% growth. Though Mr. Zhu didn't include full-year estimates for exports or investment, growth in these two areas has underpinned a manufacturing boom this year that not only spurred China's overall economy, but also reshaped global trade patterns. Chinese goods have been bursting into overseas consumer markets at an astonishing pace, competing with a range of products on price and quality. But after breaking records in trade and government spending last year, economists are saying exports and investment growth -- both averaging more than 20% for the first 11 months -- no longer appear sustainable in 2003. For one thing, China's exports will be hard-pressed to match this year's base of growth, as its biggest markets, the U.S. and Japan, struggle to recover. At the same time, the government's expanding budget deficit, now at about 3.5% of total economic output, is tempering a desire for another year of supercharged growth. The bulk of China's consumer demand remains concentrated in the country's wealthy coastal cities, so the government is expected to rely on its spending to stimulate the interior economy. Worries about rising debt are expected to constrain government bond sales to finance more infrastructure and construction projects, which could in turn slow growth, analysts say. The priority of reducing debts in different corners of the economy has become an urgent one, as Beijing contemplates another massive bank bailout and ways to fund its fledgling pension system. China is expected to reduce next year's special construction bond issuance by about 7%, analysts say, after issuing $80 billion of such bonds during a five-year spending spree. "The government is paying close attention to the debt level," says Wang Yuanhong, an economist at the State Information Center. "There will need to be some adjustments next year." Chinese officials say the economy must grow by more than 7% to absorb the millions of newly unemployed, as well as those who are flocking to big cities from farms in search of work. While some foreign experts have cast doubt on the accuracy of Chinese statistics -- and looked askance at the practice of releasing year-end figures before the year actually ends -- the economy indeed has demonstrated strong vital signs. Nearly $50 billion in foreign investment has come into the country this year, as companies soak up China's low-cost labor and jockey to sell in its big market. Urban unemployment, by the government's count hovering around 5%, hasn't climbed as quickly as many feared following China's entry into the World Trade Organization, which is forcing inefficient state companies and an impoverished farm sector to confront more foreign competition. China's economy is beginning to change. Sales of new homes and automobiles are surging, highlighting new sources of consumer demand that may help China to wean itself away from growth driven by state spending and exports. "What we're seeing is that private consumption demand is quite good," says Jonathan Anderson, a senior economist at Goldman Sachs in Hong Kong. "China can still grow at more than 7% in the near term, and we don't see anything interfering to drop that rate." Write to Peter Wonacott at peter.wonacott@wsj.com. Updated December 31, 2002