Prevent both heat and coldness in economy, ADB economist

When preventing an overheated economy, China must be aware that a large part of the economy is still cold, and more balanced development can be expected if the government could direct investor's enthusiasm from heated areas to comparatively cold areas, said Tang Min, deputy representative and chief economist of the Asian Development Bank PRC Resident Mission on the China Economy Summit at the just concluded 7th China Beijing International High-tech Expo (CHITEC).

Reporter: why we must address cold parts when preventing overheated parts?

Tang: currently there are both overheated parts and cold parts in the Chinese economy, and the cold parts are by no means small. Agriculture, for example. We have a vast rural area with a population of 900 million. But as the primary industry, the agriculture growth rate was only about 2.5 percent in last year, lower than the average level from 1999 to 2002. The overall investment growth during the first quarter of last year was about 43 percent, but those put in farming, forestry, animal husbandry and fishery only making up 0.4 percent, which were even negative if we only count the first two months. In a sense, the agricultural part is still very cold, so is the service sector which makes up 35 percent GDP. The whole tertiary industry grew by 6.7 percent last year, lower than the average of the past few years. In the whole GDP agriculture accounts for 15 percent and service 35 percent, this means nearly half of GDP has not begun to get warm.

Reporter: will the macro-control this time bring a hard landing or soft landing?

Tang: we talked about hard landing and soft landing again and again but for a long time we don't have a clear concept on them. Here I would like to give my definition. If China's economic growth is below 7 percent, if deflation appears again and import/export is lower than 10 percent of GDP, then it's a hard landing; if inflation is between 7.5-8.5 percent, import/export accounts for about 3 percent of GDP while GDP keeps growing at a two-digit speed between 10 to 15 percent, then it would be a soft landing. According to my judgment on the Chinese economy, the 2004 growth rate would be at 8.3 percent, or slightly higher, and in 2005 it would be a little bit lower. I think the macro-control this time is quite likely to end in another soft landing.

By People's Daily Online