China exports expected to be modest in first-half of 2002

yahoo ^ | July 2

[maui_hawaii]

BEIJING (Reuters) - China is likely to report modest export growth and persistent deflation in the first half of 2002 as a slow global economy and rising joblessness challenge the economy, a state newspaper on Tuesday quoted analysts as saying.

China's exports were seen having grown 12 percent in the first half of 2002, behind the 13.2 percent pace in the first five months but better than last year's 6.8 percent, analyst Yan Xianpu of the State Statistical Bureau, wrote in the official Business Weekly.

Imports were expected to have grown by 11 percent in the first half compared with a surge of 19.3 percent in the first five months, Yan wrote without giving figures for June. Moreover, export growth was likely to be weaker in the second half of the year as the sector, a pillar of the economy, feels the effects of last year's slowdown in foreign direct investment, or FDI, another analyst wrote.

Foreign-funded companies accounted for nearly two-thirds of exports, State Information Centre analyst Gao Huiqing said in a separate report in the newspaper.

First-half exports had been propped up by huge export tax rebates which had nearly exhausted this year's entire government rebate, Gao said.

Of 100 billion yuan allocated for the rebates this year, more than 40 billion had been used in the first quarter alone, Gao said.

"In order to gain more export tax rebates, exporting companies have made efforts to export the majority of their products in the earlier part of the year," Gao said.

MORE DEFLATION SEEN AHEAD

Meanwhile, renewed deflation this year had persisted through June and the benchmark consumer price index might have fallen by 0.9 percent in the first half, statistics bureau analyst Guo Tongge said in a third report in the paper.

Falling prices were expected to dog the economy further in the second half of the year, Guo said.

"While certain conditions contributing to dwindling consumer prices are to remain unchanged in the second half of this year, other factors are expected to worsen the overall price situation," Guo wrote.

An expected oversupply of farm goods would drive prices for those products down further, while rising unemployment and slimmer corporate profits would spur more residents to save money rather than spend it, Guo wrote.

"Due to the rise in savings and the drop in consumption, prices in the third quarter are expected to keep falling" with the consumer price index for the whole year likely to fall 1.0 percent, compared to a rise of 0.7 percent last year, Guo said.

[maui_hawaii]

Foreign-funded companies accounted for nearly two-thirds of exports, State Information Centre analyst Gao Huiqing said in a separate report in the newspaper.

Finally a bit of honesty.

The best way to get things done with the US is to be honest.

I hope the next thing they admit is that the US is doing its part to improve China, but that China's national attitude has some problems in it.

[maui_hawaii]

Keep in mind that foreign companies have mass impact on China's economy.

If Compaq computer makes mice in Shanghai, those mice are not all shipped to the US. They end up in England, France, Germany, Australia, etc.

[Libertarianize the GOP]

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