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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (365)	8/16/2003 1:22:37 PM
From: RealMuLan	Read Replies (2) \| Respond to of 6370

Here is one group from one of the most recognized US think tank - Rand Corp. jumps out to give a dirty laundry list about China. I bet these guys are dreaming that all these bad fortunes would happen to China at the same time<g>. And I can give a similar list about the US, maybe with even more items<g> Dirty-laundry list could do China a big favour By TOM PLATE FOR THE STRAITS TIMES LOS ANGELES - Behind the facade of the emerging giant, just how fragile is China? A provocative book, published in the United States, raises serious questions about China's future. And one wonders about the intentions of its authors. On one level, Fault Lines In China's Economic Terrain is quite brilliant. At a time when everyone and his investment adviser are singing China's economic praises as if it were the second coming of 1980s Japan, the Santa Monica-based Rand group strings together a lot of sour notes. What if everything in China went wrong economically? How might China's remarkable 7 to 10 per cent annual growth rate evaporate and head into the red? What factors, in short, could bring China up short? The authors - led by the internationally respected Charles Wolf Jr, with K.C. Yeh, Benjamin Zycher, Nicholas Eberstadt and Sung-Ho Lee - posit eight major tectonic plates along which China could slide backwards big time. If unemployment, now running at a staggering 23 per cent, worsens, it could knock China's growth rate down by 0.3 to 0.8 percentage point. Should corruption (already a big issue) become more prevalent, Beijing might expect another 0.5 point knocked off the growth rate. If the Aids epidemic continues to increase at an annual rate of 20 to 30 per cent, annual growth diminishes by something like two points. Overall, China has plenty of water, but not for the one-third of its population unluckily living on its northern plain. If authorities do not address this water crisis in the next decade, shave perhaps two points off annual growth. Thirst for oil and natural gas is also growing. If China gets hit by even a 'moderately severe' global energy shortage, it's down at least one point growth-wise. If the cancer eating away at China's banks (many bad loans and little willpower to clean them up) turns out to be as serious as Japan's, the predictable financial and crisis squeeze could drain the economy of one percentage point in growth. Consider the effect of a reversal of fortunes with foreign direct investment which, since 1985, has helped fuel China's astonishing growth. Should foreign investors be frightened off by negative political developments, or increasingly attracted to other investment options (in India, Pakistan, Indonesia, Russia, elsewhere), say hello to another one point or so drop in growth. And if the ever-present overhang of tension with Taiwan does trigger a cross-strait crisis, it could cost Beijing from 1 to 1.3 points of growth. ... But if President Hu is really as deep as admirers suggest, he'd establish a task force of China's best and brightest to evaluate the Rand 'black scenario'. It is seemingly the worst case that can possibly be assembled to devalue China's future. Rand, therefore, has done China an enormous (if unintentional) favour. It is precisely when things are going relatively well that one needs to plan for the worst. In truth, China does have serious problems (without even mentioning the usual Western obsessions such as human rights violations, iron-fisted management of Tibet, shakiness with Hong Kong and ham-handedness over Falungong). Rand has hung out for all the world to see China's dirty-laundry list. Whether or not the provocative study is read in China, few, if any, of the problems cited are going to disappear on their own. straitstimes.asia1.com.sg