Sun, Mar 10, 2002 - Page 8 News List

China's economic data still erratic

By Christopher Lingle

Of course, there have been some adjustments and improvements in data quality. Dai Xianglong (戴相龍), governor of the People's Bank of China, has offered a clearer look at the mountain of bad debt held by state-owned banks. It is now apparent that nonperforming loans account for just over 26 percent of total lending from the big four state-owned banks with most of the delinquent borrowers being state-owned enterprises.

However, analysts believe a more accurate proportion for nonperforming loans is 50 percent. If Beijing cannot come clean about the extent of these loans, it may not be able to muster the political will to demand job cuts and management changes as well as the liquidation and sale of assets needed to purge bad loans.

Despite a rosy picture painted by China's data gatherers, there are tough times ahead for the Middle Kingdom. Unless they come clean soon, the leaders in Beijing might be overseeing the equivalent of an Enron meltdown on a national scale.

Christopher Lingle is global strategist for and author of The Rise and Decline of the Asian Century.

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