Chinese Economics Thread

[antimatter]

It's official. China to shun west's financial sectors

By KEITH BRADSHER
Published: December 3, 2008
HONG KONG — The chairman of China’s sovereign wealth fund said on Wednesday that China had no plans for further investments in Western financial institutions, nor did it have any plans to “save” the world through economic policies.

The comments by Lou Jiwei, the chairman and chief executive of the China Investment Corporation, are the clearest signal yet that after taking heavy losses on initial investments in the Blackstone Group, Morgan Stanley and Barclays, state-run Chinese institutions have no appetite for further purchases in this sector.

“Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have,” Mr. Lou said as part of a panel discussion on the second and final day of the Clinton Global Initiative conference here.

Asked whether China might pursue economic policies aimed at saving the world, Mr. Lou said that the country’s leaders had a narrower focus. “China can only save herself because the scale of China is still rather small,” he said, adding that while China has more people than any other country, economic output is still low enough that the Chinese economy is not yet big enough to have a big effect on the global economy.

“If China can do a good job domestically, that is the best thing it can do for the world,” he said.

Mr. Lou’s comments represent the clearest statement yet that as global financial markets plunge and economies slow, the attention of China’s leaders is turning inward.

For several months, there has been a noticeable difference between East and West in expectations of China. Financiers in the United States and Europe have frequently talked of ways to use China’s $1.9 trillion in foreign exchange reserves to rescue Western banks, most recently with speculation that the China Investment Corporation might invest more money in Morgan Stanley, which ended up turning to Mitsubishi UFJ Financial Group of Japan instead.

But financial leaders in Hong Kong, Beijing and Shanghai, with closer links to decision makers in Beijing, have consistently maintained that having been burned on their initial financial sector investments, the Chinese are very leery of buying more. Mr. Lou confirmed this.

Similarly, Western economists have hoped that China will try to take the lead in rekindling economic growth around the world with heavier spending. But while China has already announced plans for a stimulus plan of $586 billion, most of that money is earmarked for the construction of highways and railroads, categories in which China’s need for imports is fairly limited.

President Hu Jintao warned at a government meeting last weekend that difficulties in the global economic threatened to undermine growth in China.

Laura Tyson, who served as chairwoman of the Council of Economic Advisers under President Clinton, said at the same panel as Mr. Lou that the current crisis would give further impetus to Asia’s rise in economic importance.

“It’s going to accelerate the move of economic power to Asia,” she said. “It was under way before, but this will accelerate it.” The China Investment Corporation has $200 billion and was initially expected to invest all of it overseas. But the fund has since made its largest investments shoring up the capital of banks in China.

Mr. Lou said that the sheer pace of new initiatives and new rules issued by Western regulatory agencies was disconcerting and made it even harder for him to choose worthwhile investments. “If it is changing every week, how can you expect me to have confidence?” he asked.

He did not rule out overseas investments, however, noting that, “Right now, the value of many investments is underestimated.” But he suggested that China might find some of its best opportunities in low-income countries. “We don’t want to look at only the advanced or developing countries, we also want to look at emerging markets.”

The China Investment Corporation’s first investment, in the Blackstone Group, has fared badly and attracted considerable criticism within China. The sovereign wealth fund paid $3 billion at $29.605 a share; the shares closed on Tuesday in New York at $5.34, for a loss of $2.46 billion, or 82 percent.

The China Investment Corporation also had heavy losses on its investment a year ago in Morgan Stanley, while value of the China Development Bank’s stake in Barclays has plunged.

Like many Chinese officials lately, Mr. Lou expressed concern about rapidly slowing growth in American purchases of Chinese goods, which has led to large-scale layoffs at export-oriented factories in China, particularly in the Pearl River delta region near Hong Kong. He blamed a shortage of letters of credit from American banks, which he described as making it hard for American importers to obtain the money they need to buy Chinese goods even when they have ready buyers.

“Citibank, Morgan Stanley and the government, they are very tight on their credit, so even when there is demand, they can’t make things happen,” he said

 

[bd popeye]

antimatter, You need to read the forum rules as far as starting a thread;

3, When posting a new topic, please check if the same discussion already exist.

Threads merged.


bd popeye super moderator

 

[bladerunner]

This weeks businessweek has said that more melamine tainted milk products/powder from Chinahas been found. Boy those jokers back in China must be dumb or have a death wish when the authorities catch up with them

 

[crobato]

It seems that that melamine appears found even in milk products not made in China, though in doses not as much as in the Chinese products. Still, over time, this is not good.

True about the death wish, since the melamine additions were made with the intent to foil government regulations.

 

[pla101prc]

It seems that that melamine appears found even in milk products not made in China, though in doses not as much as in the Chinese products. Still, over time, this is not good.

True about the death wish, since the melamine additions were made with the intent to foil government regulations.

i hate to sound like a conspiracy theorist there but it seems to me that this exaggerated report on the food standard combined with the tibet question are looking more and more like a concerted effort by the west portray China's situation as not-better-off-than-we-are. and all this talk of China's imminent social unrest due to job loss,can be assumed as preventing further loss of capital to China through FDI. and again, it spells "SEE the China-model isnt better than ours because they are in trouble too...YAY!:nana:" not to deny that China has problems...but what a disgusting attitude by certain individuals here in the west lol...but then again i might be just imagining things...okay i'll stop:roll:

 

[crobato]

More support likely for China exports by year-end, analysts say

Please, Log in or Register to view URLs content!

2008-12-06 21:03:28 Print

Special Report: Global Financial Crisis

BEIJING, Dec. 6 (Xinhua) -- Analysts here expect the government will announce new policies to support the ailing export sector, with the top decision-makers to meet soon to outline next year's economic plan.

Zhao Yumin, a researcher with the Ministry of Commerce, told Xinhua on Saturday that a major trade slowdown would have a great impact on employment and related infrastructure. Such a slowdown would also affect economic growth.

Two women make beds on a production line of the small private firm Nangang Shoemaking Factory in Foshan, Guangdong province. Analysts expect the government will announce new policies to support the ailing export sector, with the top decision-makers to meet soon to outline next year's economic plan. (Photo: China Daily)
Photo Gallery>>>

November export figures are due for release next week.

China's top decision makers hold routine economic policy meetings at the end of every year.

Last year's conference shifted China's monetary policy from "prudent," an approach it had followed for the previous 10 years, to "tight," in a bid to avoid overheating and reduce inflation, which were the top economic concerns at that time.

This year's meeting, however, will have to address slowing economic growth caused by weaker export and investment conditions.

Exports have been a powerful engine of the world's fastest-growing economy for years, but the sector has struggled this year as external demand weakened amid the global financial turmoil.

China's foreign trade has been growing at an annualized rate of28.5 percent over the past five years. It expanded to contribute more than 66 percent of the total domestic output last year.

But trade growth slowed to a year-on-year rate of 24.4 percent in the first 10 months, and analysts said the worst was yet to come.

At the most recent Canton Trade Fair, a venue where foreign buyers have traditionally come to make purchasing orders, trade volume fell about 10 percent year-on-year. The decline at that event in October in the southern export center of Guangdong Province indicates lower export sales ahead.

Premier Wen Jiabao and other top leaders have paid several visits to the manufacturing centers of Zhejiang and Guangdong, while President Hu Jintao noted that China was losing its competitive edge in the world market as international demand was eroded by the widening financial crisis.

The government has already introduced several measures to support the export sector, including raising tax rebate rates three times since late July.

Zhao Yumin said there was still room for further policy support, such as relaxations on processing trade and the leverage of tax rebates. She said that policy support should focus on areas that can help upgrade the trade structure.

Zhao cited encouraging enterprises to venture into high-end marketing, merger or cooperation agreements among companies that have brands, technological innovation at smaller enterprises, and the exploration of new markets.

"The crisis can be turned into an opportunity for restructuring," she said.

Zhou Shijian, a director of the China World Trade Organization Research Society, told the Guangzhou-based 21st Century Business Herald that there could be another round of tax rebate increases after the Spring Festival, which falls on Jan. 26.

Zhou said China's export growth could reach nearly 10 percent in 2009 if there was substantial policy support. He expected the worst would be over by the second quarter of next year, since there was a time lag before policies could take effect. His forecast for this year's export growth was below 15 percent.

Government moves also indicated the determination to boost the export sector, making further policy support more likely.

An executive meeting of the State Council on Wednesday vowed to support trade by facilitating investment in trade and offer easier access of trade financing for smaller enterprises.

Please, Log in or Register to view URLs content!

Industrial dynamic at core of China's fight with economic slowdown

Please, Log in or Register to view URLs content!

2008-12-06 14:29:29 Print

Special Report: Global Financial Crisis

by Xinhua writer Cheng Yunjie

BEIJING, Dec. 6 (Xinhua) -- China's infrastructure construction has gone up a gear after the massive capital input announced by central government at the beginning of November. But still a number of industries are suffering the domino effect of the deepening global financial crisis.

Henan Provincial Statistical Bureau chief Liu Yongqi said that to give the Chinese economy "a boost strong enough", "the government needs to optimize its investment to facilitate industrial dynamic so as to secure production and employment."

CHAIN REACTION

Field survey by Xinhua reporters showed that even the less export-oriented central interior -- namely, Henan, Anhui, Shanxi, Hubei, Hunan and Jiangxi provinces -- have started to feel the pinch of slowing world economy. Industries like textile, automobile, steel, coke and coal, iron ore and minerals have seen many enterprises, especially private and smaller ones, slip into the doldrums over the past three months.

Immediate results are shrinking power consumption, rising inventory, more payment default and tighter capital flow on the corporate side and reduced tax revenue on the government side.

In Shanxi's Changzhi City where coal, coking and iron making generated 80 percent of local productive value, a slew of enterprises have ceased production since October or had to operate under capacity.

Changping Group, the city's largest private iron and steel maker, has lost so far more than 400 million yuan from a combination of raised production costs and shrinking market demand. The first 10 months have seen its iron and steel output decline by 80 percent over the same period last year.

In Tangshan of north China's Hebei Province, more than half of local blast furnaces have ceased production while the city of Handan, also in Hebei, has seen more than two thirds of its smaller iron and steel companies unable to sustain normal production.

Even larger competitors have reported declines in profits. The Wuhan Iron and Steel Group, for instance, has slashed its production by 30 percent so far, with its monthly profits plunging from 1.12 billion yuan in August to 46 million yuan in October.

WISDRI Engineering and Research general manager Xiao Bai said that the doldrums afflicting the iron and steel industry partly resulted from the blind investment and over capacity of the past few years. "The financial crisis simply accelerated the industrial cycle," he said.

Luoyang Development and Reform Bureau chief Li Shengping held that iron and steel was one of the worst affected industries. "But it did give us a clue that the global financial crisis had affected China's tangible economy."

From the export-oriented eastern coast to the central interior, a chain reaction to the deepening credit crunch is clearly in view. In October, the industrial power consumption, a key indicator for industrial dynamic, fell 50 percent from September in Zhejiang, 13 percent in Anhui and 11 percent in Henan.

Jiangxi Provincial Economic and Trade Commission director Tu Qinhua explained that market shrinking triggered by the financial crisis had forced many enterprises to sell off their products at lower prices, which further weakened industrial profitability and eroded investment confidence.

In a high-profile meeting last Friday, the Political Bureau of the Central of the Communist Party of China decided that the financial crisis would inflict much bigger losses over global tangible economy and that the impacts on the Chinese economy would become "increasingly noticeable".

With the annual central economic conference around the corner, Liu Yongqi of Henan Statistics Bureau expected the government to draw up more policies to maintain corporate dynamic, including easing capital strain and facilitating machinery manufacturing that might give a bigger drive to a broader sphere of industries.

Please, Log in or Register to view URLs content!

China helps capital-thirsty small businesses tide over difficulties

Please, Log in or Register to view URLs content!

2008-12-06 10:23:46 Print

By Xinhua writer Wu Qi

BEIJING, Dec. 6 (Xinhua) -- Tang Keshuai has been down in the dumps for months, ever since he began to feel the pinch of a constrictive money supply since mid March.

Tang, manager of Langyu Plastic and Rubber Co. Ltd., a plastic and rubber product producer based in east China's Wenzhou, Zhejiang Province, used to settle his accounts with raw material suppliers once every four months, on the traditional Chinese lunar festivals of Dragon Boat, Mid Autumn and Spring Festival respectively.

But the rule was changed in mid March when raw material suppliers asked for accounts to be settled once each month. The change was not a good one. The original four-month span allowed Tang to have sufficient active money in his capital chain.

Capital pressure from upstream was one part of the story. Tang received smaller orders over the past months. In the first three quarters, Tang's company had only 3 million yuan (439,090 U.S. dollars) sales turnover, compared with 20 million yuan in 2007.

Tang had to dismiss 30 out of the 50 staff workers in August and transferred most orders to other plants, in order to lower production costs by 10 percent.

Tang was amazed to find it hard to transfer the orders. "I felt curious in the beginning why it was hard to seek processors, since orders became fewer on the market," said Tang. Longgang Town, home to Tang's company, currently has only about 100 plants of his type, while there were about 600 such plants a year ago.

In early June, Tang's company had almost exhausted its supply of cash, with only 200 yuan left in the account. Tang had nothing else to do except to driving his three-year-old daughter to the kindergarten. Two days later, he had to borrow money from his sister to "have meals". He continued for 10 days, and only pulled through the crisis when a Russian client remitted 30,000 U.S. dollars to his account.

"I was lucky to stick it out. But many companies have closed down because of a broken capital chain," said Tang.

During the current Wall Street-ignited global financial crisis, China's small and medium-sized enterprises (SME), largely labor-intensive and vulnerable to fluctuations in domestic and external demand, are affected most.

In the first half of 2008, 67,000 SMEs, each with sales income exceeding 5 million yuan, closed down, laying off more than 20 million employees, said the National Development and Reform Commission (NDRC).

The figure didn't include service industry firms and SMEs whose sales were less than 5 million yuan, since there were no authoritative figures available on those categories.

Industry officials attributed the SME difficulties mainly to high raw material prices (leading to higher production and operation costs), financing difficulties, sharp export plunges and RMB appreciation.

Data from the China Association of Small and Medium-sized Enterprises (CASME) showed that compared with the second half of 2007, the country's SMEs have suffered a 20-percent rise in labor costs, an 11-to-15-percent rise in raw material costs, and a 40-percent rise in borrowing costs. But the average product ex-factory price is up only about 5 percent. These factors, accompanied by surging land prices and the appreciation of the RMB, have almost pushed SMEs to the limit.

SMEs are an important pillar of the Chinese economy. More than 95 percent of the 4.3 million SMEs are privately owned and many are in the export sector. They generate almost 60 percent of the nation's gross domestic product (GDP), 50 percent of tax revenues, 68 percent of exports and 75 percent of new jobs every year.

Link for continuation

Please, Log in or Register to view URLs content!

 

[crobato]

Please, Log in or Register to view URLs content!

China opens top economic work meeting with focus on stable growth

Please, Log in or Register to view URLs content!

2008-12-08 23:42:55 Print

Special Report: Global Financial Crisis
·China's annual Central Economic Work Conference opened in Beijing Monday.
·Observers believed the event would give priority to efforts to maintain stable growth.
·They reckoned in 2009, China would see more risks for worse economic slowdown.

BEIJING, Dec. 8 (Xinhua) -- China's annual Central Economic Work Conference opened here Monday to set tone for the economic development next year.

Observers believed the three-day event would give priority to efforts to maintain stable economic growth.

They reckoned in 2009, China would see more risks for worse economic slowdown, more struggling smaller businesses, grim export situation and arduous task of transformation of economic growth pattern.

"It is imperative for China to maintain an economic growth of at least 8 percent," said Zhuang Jian, senior economist with Asian Development Bank's China Resident Mission.

It was hard for China to bear the consequences of a too slow GDP growth, Zhuang added, citing bankruptcy of numerous enterprises, more migrant workers being laid off and difficulties for college graduates to find jobs.

China's macro-economic policies experienced a dramatic adjustment-- from "preventing economic overheating and curbing inflation" at the beginning of this year to "maintaining growth through expanding domestic demand" at present. In the first three quarters, the nation saw its GDP growth slowed to a single-digit rate for the first time over the past five years, thanks partly to macro-economic control efforts and the ongoing financial woes worldwide.

"The Chinese economy has suspended continuous heating and proceeded into a period of slow down," Zhang Liqun, a researcher with the macro economy department under the Development Research Center of the State Council, commented.

"The slowdown was worse than expected," said Ma Jiantang, head of the National Bureau of Statistics.

Data from the bureau showed that the country's GDP growth was 10.6 percent in the first quarter, 10.1 percent in the second, and9 percent in the third.

President Hu Jintao said at the end of November that the Chinese economy was pressurized by global economic downturn, obvious ebbing of demand from abroad and weakening of the country's traditional competitive edge.

"Impact from the international financial tsunami on the Chinese economy has begun to show up, and to deepen into various sectors of the real economy," said Wang Yiming, deputy head of the macro economic research institute of the National Development and Reform Commission.

Since mid October, the Central Government has promulgated a string of policies and measures to prevent the national economy from sliding drastically. They included end of a tight monetary policy and commencement of a moderately easy one, shifting the fiscal policy from "prudent" to "active", starting projects to improve infrastructure and promote people's livelihood, and, expanding domestic demand.

The People's Bank of China announced tax exemptions and downpayment cuts as of Oct. 27 to boost the falling real estate sector. The minimum downpayment for a first-time buyer of a residence smaller than 90 square meters was reduced to 20 percent from 30 percent.

Interest rates on mortgages for first-time buyers were cut 0.27percentage point. The floor for interest rates was lowered to 70 percent of the central bank's benchmark rate.

The central bank cut benchmark interest rates by 0.27 percentage point as of Oct. 30, the third such move in six weeks.

The benchmark one-year deposit rate dropped to 3.60 percent from 3.87 percent, while the benchmark one-year lending rate fell from 6.93 percent to 6.66 percent.

Tax rebates were raised for 3,486 export items as of Nov. 1. The adjustment covered such labor-intensive industries as textiles, toys, garments, and high-tech products, accounting for 25.8 percent of products covered by customs tariffs. Rebate rates run roughly from 9 percent to 14 percent.

On Nov. 9, state councilors announced a four-trillion-yuan (583.9 billion U.S. dollars) economic-stimulus package, which was seen as the most exciting stimuli in 10 years.

To boost consumption, particularly in the rural areas where 900 million people inhabited, was important part of efforts to expand domestic demand, observers believed.

China has launched a scheme to subsidize rural residents for buying home appliances since the end of 2007. It is estimated that in a period of four years, nearly 480 million units of refrigerators, washing machines, color TV sets and cell phones, which were in huge demand among farmers, will be sold in rural areas nationwide. That means 920 billion yuan to be spent by rural consumers.

"There is still a large room for the government to mull more policies to boost consumption, such as raising the threshold for taxable income and increasing income for lower-income earners," said Cai Zhizhou, an economist with the prestigious Peking University.

Export has since long been a major driving force for the Chinese economy. Economists believed the stable development of smaller enterprises, particularly the exporters, which provided jobs for 75 percent of urban employees and rural migrant workers, was related to the stability of the enormous Chinese labor market.

How to prevent export from sliding down too fast is one of the top concerns of the Chinese government.

"It is no doubt that China's export situation will become more grim next year. However, if the country manages to maintain a moderately fast growth in foreign sales of machines and electronics, it will likely achieve a growth of more than 15 percent in export at large," said Mei Xinyu, a trade expert with the Ministry of Commerce.

China has taken a string of measures to boost development of smaller enterprises.

"It is necessary for the government to work out more detailed, effective methods to mitigate tax burdens and enhance credit support for smaller businesses, and to help them with their efforts to promote technical upgrading and explore more markets," said Zhao Yumin, another economist with the Ministry of Commerce.

The service sector, which was able to provide numerous jobs, was yet to be expanded substantially, Zhao added.

Zhang Xiaojing, a senior economist with the Chinese Academy of Social Sciences, said that it was definitely wrong for China to waive long-term goals for short-term interests. He believed that to promote the shift of economic growth pattern and maintain the sustainable economic growth would be one of the important topics for the ongoing Central Economic Work Conference.

 

[crobato]

Volvo being considered to be sold to a Chinese company.

Please, Log in or Register to view URLs content!

Ford discusses Volvo sale to China Changan: report
Tue Dec 9, 2008 9:27am EST



SHANGHAI (Reuters) - Ford Motor is in talks to sell its Volvo car business to its China partner Changan Automobile Group, the National Business Daily reported on Tuesday, citing an unnamed source at the Chinese company.

Changan president Xu Liuping held discussions with Ford and Volvo during last month's auto show in the Chinese city of Guangzhou, the newspaper said.

The report did not provide details of the talks, but quoted an unidentified Changan executive as saying there was a chance for a deal. Changan is one of China's six biggest auto groups.

Ford and Changan spokesmen in China could not be reached for comment on Tuesday. The U.S. automaker operates a car venture with Changan's listed arm, Chongqing Changan Automobile Co, which makes mid-sized Focus sedans.

Ford, which owns Volvo, and General Motors Corp, owner of Saab, are trying to sell those units as they seek a multi-billion dollar government bailout.

Industry sources say U.S. auto companies have approached a range of Chinese companies about possible asset sales, but deals would be difficult to reach because of the risks involved as both the U.S. and Chinese auto markets slow sharply.

China's Dongfeng Motor Group Co is monitoring the situation at Detroit's troubled auto makers, but a source with direct knowledge of the matter told Reuters last week that it was too early to say if it would be interested in buying any assets.

Chery, a Chinese auto maker that secured a $1.45 billion loan from Import-Export Bank of China this week, will use the money to improve its product quality rather than buying U.S. auto assets, its chairman Yin Tongyao told the Shanghai Securities News on Monday.

(Reporting by Fang Yan; Editing by Andrew Torchia and Ken Wills)

 

[crobato]

Chinese police buy American.

Please, Log in or Register to view URLs content!

Three traffic police officers rode brand new Harley Davidson motorcycles when on potrol missions along the Chang'an Avenue on Monday morning.

 

[AssassinsMace]

China's next 30 years: Building the world's biggest cities

SHANGHAI, Dec 10 (AFP) Dec 10, 2008
China's past 30 years of reforms planted seeds that will in the coming decades produce future coastal megacities, an urban population of one billion and possibly the world's biggest economy.
What the next 30 years of reforms have in store may be unclear but experts agree with widespread pollution problems and a tidal wave of migration set to hit China's cities, urbanisation will be the future's biggest challenge.

"The next 30 years are going to be a critical timetable for addressing all the needs of a large population and how China manages cities," said James Canton, author of "The Extreme Future".

By 2025 China's urban population is expected to rise to 926 million from 572 million in 2005 -- an increase equal to the entire current population of the United States, according to management consultants McKinsey & Company. By 2030 that number will increase to a billion.

Over the next two decades China will build 20,000 to 50,000 new skyscrapers -- the equivalent of ten New York cities, according to McKinsey.

More than 170 cities will need mass transit systems by 2025 -- more than twice the number in all of Europe -- in what McKinsey described as the "greatest boom in mass-transit in history".

Chinese cities will leverage their manufacturer strengths to become innovation centres for products like nanotechnology, smart materials and state-of-the-art pharmaceuticals, Canton predicted.

They will also be home to the world's largest middle class, he said. But to accommodate more than a billion people, entirely new forms of infrastructure and security frameworks will need to be developed.

"You're going to have to say no to somebody. You will see the emergence of biometric identification; you will not be able to enter some cities," he said. As cities become bigger, land reclamation will leave little water between Hong Kong and the mainland, Canton forecasted.

Demographic, economic and ecological pressure will leave China with no choice but to try innovative solutions, Canton said.

"Very few times in the history of a global civilisation will you see this ability of creating something fresh and new," Canton said. "They are going to do some very stunning things in terms of the next cities of the future.

Economist and urban planner Stanley Yip is already working on the next generation of Chinese cities.

He is leading British engineering consultancy Arup's work with various cities across China on experimental eco-towns as part of a drive by Beijing to develop competing sustainable solutions.

The future of Chinese architecture and design could be dictated by a new law requiring all new buildings to cut energy use by half by the end of 2010, he said.

To meet those requirements new buildings will be stripped down, flooded with natural light, super-insulated in cooler Northern cities and more open and ventilated in the south. Solar panels will become common features.

"All these devices will come in and they will start to change the look and feel of the buildings," Yip said.

By 2025 China is expected to overtake Japan as the world's second largest economy, the US National Intelligence Council forecasts.

"Few countries are poised to have more impact over the next 15-20 years than China," the US National Intelligence Council said in its latest forecast.

The biggest threat facing China's Communist leaders are urban challenges such as growing gaps between the rich and poor, a fraying social safety net, official corruption and environmental damage, the council said.

But barring a "perfect storm", where several of these issues flare up at once, the Communist Party is likely to maintain its grip, the report said.

By 2038, China will likely be the world's largest economy but most incomes will still lag behind the West, said Yao Shujie, head of University of Nottingham's School of Contemporary Chinese Studies.

The next generation of leaders' priorities will be mending the country's social and environmental fabric, Yao said.

"The last 30 years didn't do so well in terms of equality and social justice and the environment and there was slow progress in terms of political reform," Yao said. "These are going to be the biggest challenges in the next 30 years."





All rights reserved. © 2005 Agence France-Presse.