China Predicted 7.3% Economic growth

China’s top national planning agency has predicted economic growth next year be better than widely anticipated, forecasting it will reach 7.3 percent, state media reported recently.

The forecast, which stands out against generally more gloomy views among local economists and an official 2002 growth target of just seven percent appeared in a report.

"Many research institutes currently think that given the US downturn, it may not even be possible to reach seven percent growth next year," said the report, written by Liu Guoyan, an economist at the State Development Planning Commission.

Chinese economy needs tax reforms: ABN Amro

The Chinese economy faces a pressing need for more reforms if it wants to avert a sharp slowdown in the face of waning global demand, a report by a global bank said.

Specifically, Beijing has to overhaul the national tax structure and reduce spending on public infrastructure, which has been the growth driver for several years, Dutch-based ABN Amro said in a report recently.

"We believe the government can afford its current pro-active fiscal policy," said the bank.

"But economic growth largely driven by government infrastructure spending will not be the optimal path for China’s economic development," it said.

Now that it is a member of the World Trade Organisation (WTO), Beijing needs to seriously reform the country’s tax structure to bring it in line with that of other World Trade Organisation nations, ABN Amro said.

The bank said Beijing should also consider cutting taxes which will reap long-term benefits despite a short term reduction in government revenue.

"A tax cut will probably reduce revenue but will also enhance domestic demand and create investment opportunity for the private sector, which in turn will increase future tax revenue, "said the bank.

Cutting taxes would be better than public spending on infrastructure projects in term of economic efficiency after several years of pump-priming through fiscal stimulus programmes, said, the Dutch-based ABN Amro.

"Efficiency is of paramount importance in China’s resource allocation," said the bank.

"The simplest way to do this is to put money into people’s pockets, as people are wiser spenders than the government. This is indeed the foundation of a market economy."

Japan forecasts zero growth in 2002

The Japanese government has forecast zero percent growth next fiscal year, softening earlier predictions of contraction on hopes that fiscal stimulus programs and recovery in the United States will support the economy.

But there was still concern that growth could slow below zero percent in the fiscal year to March 2003 as hastened write-offs of bad loans increase bankruptcies and aggressive restructuring in the private sector throws more people out of jobs, the nationwide Asahi newspaper said. The mass-circulation Mainichi carried a similar article. Neither article cited sources, as is common in Japanese newspapers. Finance Ministry bureaucrats had questioned whaming by the Cabinet that the economy would possibly shrink next year, saying such pessimism was merely meant to justify new spending the Asahi said.

Amid such criticism, the government re-examined its data and concluded that expected recovery in the United States during the second half of fiscal 2002 as well as benefits from a proposed second Japanese supplementary budget will hold growth here at zero percent.

Sinagpore's economy recovering

Singapore’s recession scarred economy is showing signs of a turnaround with latest trade figures showing the decline in the key non-oil domestic exports was slowing.

The 21.1 percent year-on-year decline in November to 7.99 billion Singapore dollars (4.36 billion US) was at the lower end of economists’ projections, and an improvement on the 21.6 percent contraction in October.

Crucially for the island’s export-dependent economy, the November fall in electronics narrowed to 24 percent or 4.99 billion dollars, down sharply from the 30.4 percent decline posted the previous month.

Electronics exports, which account for a major portion of Singapore’s non-oil domestic exports, have been squeezed severely by the weak demand for electronic goods globally and the slowdown in the world’s major economies, notably the Untied States.

Japan's trade surplus down

Japan’s trade surplus in November fell 16.3 percent from a year earlier in the 17th straight month of decline as the global technology slump continued to hurt exports, the finance ministry said recently.

The surplus fell to 498.3 billion yen (4.01 billion dollars) in November. The decline is the longest since it fell for 25 consecutive months from December 1994 to January 1997.

Exports in November slipped 9.1 percent to 3,892.2 billion yen from a year earlier. Automobile exports rose 15.7 percent thanks to shipments of higher priced models to Europe, a ministry official said.

But exports of electronics parts plunged 32.2 percent with computers and other office equipment skidding 25.8 percent.

Overall imports sank eight percent to 3,394 billion yen, due mainly to falling crude oil prices, the official said.