Investing in China a long-term rewarding game

Chinese Vice Financel Minister Lou Jiwei asserted recently that basic positive factors are stable enough to justify long term investment in China.

He mentioned first the high bank deposits which he believed would keep for at least another one or two decades.

The labor market would remain flexible, he affirmed. Although he recognized that lobar costs were rising fast in coastal areas, he noticed that investors were moving to the inland. Infrastructure there was also very good, he said. He regarded this as new opportunities. And even in the coastal areas, there is rich cheap labor supply. He believes the flexible labor market will keep on.

Lou confirmed that China would carry on its commitment to the open policy which has lasted for 25 years. After comparing with other nations with the similar development level, he has found that China is economically open quite wide to the outside world. "We have adopted an very open policy", he repeated.

He also reiterated the consistency of Chinese government's reform on marketization. He took the banking reform and the efforts on promoting the free flow of the labor as examples. "These reforms will continue," he promised.

He is thinking of holding down the government expenditure and adopting a new tax system in favor of enterprises. He reaffirmed that it would not be long before the experience of the northeast China in value-added tax reform would become a national practice.

In his conclusion, he reassured investors of a rosy outlook in a long run for the Chinese economy of which he does not see any possibility of a hard landing.

He also talked about China's foreign trade. In 2004, China's imports and exports are expected to reach 1.1 trillion USD with a trade surplus with EU and US while a trade deficit with Asian and neighboring countries.

He reviewed the ups and downs in China's exports in recent years. 1997 witnessed a sharp upswing of China's exports, followed by a decline in 1998 when the world was hit by the Asian Financial Crisis. It managed a rebound after that. But a standstill of the world economy in 2001 dragged it down again. Then a recovery in EU and US in the last two years pushed China's exports up.

This makes him think that the influence of China's trade on its neighboring Asian nations largely depends on demand from EU and US. As long as they have robust demand, China will be able to a driving force in Asia.

Domestic demand serves as another boost to China's imports from its Asian neibors. He stressed that China was doing well and has built up experience in cooling off the overheating sectors in its economy.

By People's Daily Online