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Experts: Plan to 'Cool' Chinese Economy Could Impact Region - 2004-04-21


The World Bank predicts East Asia's economy will expand by more than six percent this year - the fastest growth in four years. Some regional economists say growth hinges on China's booming economy.

The World Bank says the economies of East Asia will expand at 6.3 percent this year, nearly twice the rate the bank estimates for the global economy. It says the recovering U.S. economy contributed to renewed demand for goods manufactured in Asia. But the World Bank also notes that demand from China made up about half the growth in the region's exports.

China reported that its economy grew by 9.1 percent last year. Many economists fear some areas of China's economy, like property and construction, could overheat and crash if banks are unable to control lending.

The Asian Development Bank's assistant economist Jean-Pierre Verbieste says Beijing is trying to cool its economy, but if those policies fail, there are risks to the region.

"China has been absorbing large amounts of exports from the rest of the region but if something happens in China and overheating becomes excessive and there is a hard-landing in the economy - all the other countries will of course suffer from it."

But the World Bank says slower growth in China would have only a modest impact on the growth prospects of other Asian nations.

The World Bank predicts that Thailand's economy will expand by 7.2 percent, and Vietnam will likely see growth of seven percent this year.

The bank also noted the speedy recovery of Hong Kong, Taiwan, and Singapore from the setback dealt their economies early last year by the onset of Severe Acute Respiratory Syndrome.