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To: Bobby Yellin who wrote (17060)	8/31/1998 7:22:00 PM
From: goldsnow	Respond to of 116796

as was scripted.....Massive China spending is about to begin... China announces rail project to boost economy 04:16 a.m. Aug 31, 1998 Eastern By Andrew Browne BEIJING, Aug 31 (Reuters) - China underlined its determination to boost economic growth with huge infrastructure spending on Monday by announcing work had begun on a 4.5 billion yuan ($542 million) rail link between the island province of Hainan and the mainland. The 542.6 km (337 mile) link, which will include China's first train ferry, was designed to help China achieve its 1998 economic growth target of 8.0 percent, the People's Daily reported. It is one of nine ambitious rail projects planned for this year. China is promoting Hainan, in the South China sea, as a tourist destination. Its economy is dominated by agriculture and fisheries, and the tropical island is an important producer of rubber and tea. China's export growth has slowed sharply as a result of the Asian financial crisis, and consumer demand has slumped, raising fears of deflation. Priming the domestic economy with massive investment is Beijing's only hope of keeping economic growth brisk enough to create sufficient jobs to head off social turmoil. Finance minister Xiang Huaicheng, in a report published on Monday in the People's Daily, made clear Beijing was determined to achieve 8.0 percent growth by boosting investment in the second half of the year. Meeting the target, Xiang said, ''is not only an economic issue but is politically significant.'' ''Not only can it underpin Chinese people's confidence in overcoming economic difficulties and foreign investors' faith in our country's economic prospects, it is also favourable for the stability of Hong Kong's economy,'' he said. ''It offers a basic guarantee that state enterprises will be able to pull out of their difficulties,'' he said, in a reference to China's efforts to overhaul its bloated state sector. China's economy grew by 7.0 percent in the first half after expanding by 8.8 percent in 1997. The economy has been further battered by floods that have devastated large parts of China's heavily-populated grain basket along the central Yangtze River and caused extensive damage to industrial areas in the northeast. Xiang said a previously announced 100 billion yuan bond issue to fund infrastructure investment would add more than 2.0 percentage points to this year's growth. China's retail price index fell 3.2 percent in July year-on-year, extending a deflationary trend that began in October last year. Exports rose by 6.9 percent in the first seven months from a year earlier. This compares with export growth of 20 percent for all of 1997. The People's Daily said ground breaking for the railway linking Guangdong province with Hainan took place on Sunday in Haikou, the capital of Hainan. The project would be jointly funded by the Ministry of Railways and the Guangdong and Hainan provincial governments. It would be completed in 2001. China has announced plans to boost spending on railway construction to 45.0 billion yuan this year from 34.9 billion yuan in 1997. Railway minister Fu Zhihuan has said spending over five years would reach 250 billion yuan, with funds raised partly from overseas capital markets. State media this month revealed plans for a 63.6 billion yuan ($7.66 billion) railway link between the remote Himalayan region of Tibet and southwest Yunnan province. Copyright 1998 Reuters Limited.