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China Mongolia COUNTRY REPORT China Mongolia 1st quarter 1996 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 40 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent Street The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, USA Hong Kong Tel: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 Electronic delivery EIU Electronic Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Moya Veitch Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases CD-ROM Microfilm FT Profile (UK) Knight-Ridder Information World Microfilms Publications (UK) Tel: (44.171) 825 8000 Inc (USA) Tel: (44.171) 266 2202 DIALOG (USA) SilverPlatter (USA) Tel: (1.415) 254 7000 LEXIS-NEXIS (USA) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1996 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1350-7109 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Summary China, Mongolia 1st quarter 1996 March 1, 1996 China Political and economic structures Pages 3-4 Outlook: Jiang Zemin is continuing to consolidate his position at the apex of the collective leadership, but at a price. Economic policy will remain focused on keeping inflation at bay by means of continued tight credit. Enterprise reform will be slow while efforts to direct resources towards the interior will be stepped up as the Ninth Five Year-Plan comes into effect. GDP growth will slow further in 1996-97 as industrial output and investment growth are curbed by tight credit. A recovery in exports in 1997, after a slowdown in 1996, will be the main reason for slightly faster GDP growth in the latter year. But as investment starts to pick up again imports, stimulated by tariff reductions, will grow faster than exports in 1996-97. This will help reduce the current-account surplus to below $6bn in 1997. Convertibility of the renminbi on current account will not exert much downward pressure on the currency, which will depreciate against the US dollar in line with the inflation differential. Pages 5-9 The political scene: Jiang Zemin has been seeking to consolidate his posi- tion by promoting supporters, claiming the ideological high ground and assert- ing China’s rights with respect to Taiwan. There is jostling for various key positions, notably that of premier. A tough stand is being taken on human rights and dissent in Tibet and Mongolia. Verbal hostilities towards Taiwan have intensified and tensions with the USA remain high. The PLA troops to be stationed in Hong Kong have been identified and relations with the UK have warmed. China is attending the EU-Asian summit in Bangkok. Rail links will be re-established with Vietnam. China may become embroiled in a dispute over the Senkaku Islands, claimed by China and Japan. Pages 9-18 Economic policy: Monetary policy will remain tight in 1996, but there will be leakage. Rising government debt is costing more to finance. The renminbi will soon be made convertible. The Special Economic Zones will continue to play a role, but their privileges and exemptions, together with those of foreign invested enterprises, are to be phased out. Tariff cuts are being announced, as promised last year. Reform of the state-owned enterprises and the financial sector remains a distant goal. Pages 18-23 The economy: Growth slowed in 1995, but was still in double digits. Inflation fell, but it is still not eradicated. Fiscal reforms have yet to improve the position of the central government. Pages 23-25 Sectoral trends: It is being accepted that grain imports will have to rise, although 1995 was a bumper year. Growth in industrial value-added slowed to 13.4% in 1995. Output of state-owned enterprises grew faster than the previous year; that of collectives and the private and foreign-invested sectors grew more slowly. Township and village enterprises are increasing their share of exports. EIU Country Report 1st quarter 1996 © The Economist Intelligence Unit Limited 1996 2 Steel and automobile output were stagnant in 1995. Transport statistics showed a decline. Pages 25-29 Money and finance: Financial and commodity markets are thriving. There is a lot of foreign interest in the fledgling insurance market. Monetary policy remains a blunt tool so long as the level of interest rates is distorted. An interbank market is to be established. Pages 29-32 Foreign trade, investment and debt: Although the phenomenal growth of exports slowed as the year progressed, there was a substantial trade surplus in 1995. The share of foreign-invested enterprises in total trade continues to rise, while that of the Special Economic Zones is falling. Foreign capital is still flowing in fast and China has returned to the US capital market. Pages 32-35 Mongolia Political and economic structures Pages 36-37 Outlook: The ruling MPRP is likely to win the June parliamentary election, not least because electoral reform has been ruled out. The economy, having returned to growth, is set for further improvement. Larger inflows of aid and foreign investment will help revivify moribund sectors such as construction, but problems will persist in agriculture. Page 38 Review: The winter session of the parliament saw active legislation, but there will not be an electoral reform bill, despite popular support for such a move. Education is the focus of government attention. Russia has agreed not to press the issue of Mongolia’s debt and overtures have been made to the USA and Japan. Growth in 1995 was an encouraging 6.1%, with industrial output growth strong too. The 1996 budget has been approved and the IMF has defended its anti-inflation programme. Price reform will continue. Industry is performing well; agriculture remains problematic. Exports have been boosted by large rises in exports of minerals. The donor group has made a pledge of $212m for 1996. Pages 39-52 Statistical appendices Pages 53-56 Editorial queries: Georgina Wilde; Ken Davies Tel: (44.171) 830 1000 Fax: (44.171) 499 9767 Subscription queries: Jan Frost Tel: (44.171) 830 1007 Fax: (44.1708) 371 850 EIU Country Report 1st quarter 1996 © The Economist Intelligence Unit Limited 1996 China 3 Political structure: China Official name: People’s Republic of China Form of government: one-party rule The executive: 15-member State Council elected by the National People’s Congress (NPC) Head of state: a president (currently Jiang Zemin) is elected for a renewable five-year term by the NPC National legislature: unicameral National People’s Congress (NPC): 2,970 delegates elected by provinces, municipalities, autonomous regions and the armed forces; elects the president and members of the State Council and the members of the Standing Committee of the NPC which meets when the NPC is not in session. All the arms of the legislature and executive sit for five-year terms Regional assemblies and administrations: the 22 provinces, three special municipalities and five autonomous regions elect local People’s Congresses and are administered by People’s Governments Last national elections: March 1993 (presidential and State Council) Next elections due: by March 1998 (presidential and State Council) National government: the Politburo (currently 20 members) of the Chinese Communist Party sets policy and controls all administrative, legal and executive appointments; its Standing Committee is the real focus of power Main political organisation: Chinese Communist Party (CCP) Politburo Standing Committee Jiang Zemin (general secretary); Li Peng; Qiao Shi; Li Ruihuan; Zhu Rongji; Liu Huaqing; Hu Jintao President Jiang Zemin Vice-president Rong Yiren Premier Li Peng Vice-premiers Zhu Rongji; Zou Jiahua; Li Lanqing; Qian Qichen; Wu Bangguo; Jiang Chunyun Heads of selected state ministries and commissions State Council General Office Luo Gan Ministry of Foreign Affairs Qian Qichen National Defence Chi Haotian State Planning Commission Chen Jinhua State Economic & Trade Commission Wang Zhongyu State
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