China Emerges As World's Workshop, To Consolidate Gains In 2004

By Agence France-Presse China's economy is set firmly on course for another strong year in 2004, with the country emerging as the unquestioned workshop of the world as it produces an increasingly sophisticated range of goods. After a difficult start, China rebounded sharply from a SARS-induced slowdown in the first half when the outbreak of the disease caused billions of dollars of losses. The pick up since has been so strong, with growth running at 9.1% in the third quarter alone, that some analysts have pointed to the dangers of overheating while the authorities have moved to curb some of the froth seen in the property and auto sectors. Success brings its own reward but also problems, with Beijing likely to face continued charges from its major trading partners, principally the United States, that it keeps the yuan deliberately undervalued so as to boost exports. However, while American politics are certain to prove a thorn in China's side, the most important battles remain to be fought at home, with the Communist Party knowing that it has to meet its side of the social contract. Led by President Hu Jintao, China's policymakers will likely aim for a more balanced economy by giving greater weight to the growing number of affluent consumers and reducing the country's dependence on exports. At the same time China's policymakers must control investment in overheated industries such as steel, autos and telecommunications while priming the laggard northeast and southwest. For 2004, despite the concerns at possible overheating, economists say they expect the current momentum to continue, but not increase, next year. "Next year will be a year of consolidation in the economy's growth. It will definitely not accelerate further," said Chen, who predicts about 9.0% growth. Copyright Agence France-Presse, 2003