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Balancing the Budget Stressed Again
An extra 108 billion yuan of treasury bonds were issued to fund the program. The deficit resulting from the measure was spread on the budgets of 1998 and 1999. Consequently, the 1998 deficit was raised to 96 billion yuan.
The measures did inject some energy into the economy last year. GDP growth climbed to 7.6 percent in the third quarter and 9 percent in the fourth quarter, as compared to 7 percent in the year's first half.
Officials believe the active fiscal policy will remain necessary in 1999 as the macroeconomic environment has not changed much. The government also needs more money to complete the projects it launched last year.
As a result, the state's deficit for 1999 was set at 150.3 billion yuan.
Experts said China's falling prices are helpful for the government's active fiscal policy, because they greatly reduce the possibility of inflation caused by the increased spending.
But they also said that the expansion in the deficit should be effectively controlled in case prices started to inch upward.
BEIJING REVIEW, MAY 17, 1999
Measures Called To Absorb Funds
China must put forward further measures to attract direct foreign investment as international companies are becoming more cautious when investing abroad in the wake of the Asian financial crisis, stated analysts.
"What has been easy for China in the past is now becoming more difficult," said Thomas Klotz, Vice-President of A T Kearney (Hong Kong) Ltd.
"There is a need for a change in the mind-set. China has to become more active in seeking direct foreign investment," Klotz said.
The Ministry of Foreign Trade and Economic Cooperation says that China will further open up to the outside world in order to attract more foreign investment. China must also improve the quality of the utilization of these funds.
Hu Angang, research fellow at the Research Center for Ecoenvironmental Sciences, called for a unified foreign direct investment policy as well as a treatment policy for foreign companies.
"Furthermore, there is a need for a transparent legal framework, reduced transaction costs and improvements in approval and registration procedures," Ru said.
Ernst Behrens, president of Siemens China operations, said the key is whether China provides foreign companies with a level playing field and allows them to become an integral part of the country's economy.
"If this can be established, the second round of foreign investment could soon be in place," said Behrens.
Virginia Kamsky, chairman and chief executive officer of Kamsky
Associate Inc. said that she sees a very "flexible period ahead for foreign
investors" and "feels positive about opportunities" in many sectors
including agro-business, chemicals, information technology, electronics, environmental
protection, entertainment, financial services and health care.