While Chinese economic growth figures may be the envy of many Taiwanese officials, an economist yesterday warned that the numbers may be the result of government manipulation, which may later trigger financial risk.
New business investments via loans from China's four state-owned banks to investors -- at a growth rate of 96.2 percent for this year -- are helping prop up the nation's economic prosperity, said Fahn Jiin-ming (
Fahn made the comments at a seminar yesterday, adding that China has projected its own rate of GDP growth at 7.7 percent next year and 7.5 percent this year -- a prediction that has been seemingly unaffected by the current global economic malaise.
"Most of the loans have the potential to become non-performing loans, yet banks need not shoulder any risks because it's government policy [to paint a rosy economic picture]," Fahn told the Taipei Times.
Addressing the seminar, Fahn also said that China has managed to maintain its recent high economic growth rate mainly by boosting investments and stimulating domestic demand.
From 1998 to 1999, the Chinese government has continued to increase its spending on domestic infrastructure and public construction with the money it borrowed from state-owned banks. As a result, bank assets decreased while governmental bonds it owned increased.
"This year, China stopped doing so because doubts were raised over whether the government was secretly hollowing out the banks' assets," Fahn said.
He added that, until last December, China had funneled out 400 billion yuan (US$48.3 billion) from the banks.
The CIER also yesterday projected Taiwan's economic growth next year would hit 2.36 percent based on a prediction of next year's 4.16 percent export growth.
Taiwan's GDP growth rate is expected to turn positive and hit 0.8 percent in the second quarter next year following the first quarter's negative 0.21 percent, said Wang Li-jung (王儷容), head of the institution's economic outlook center.
However, Wang warned that if the global economic recovery is slow, Taiwan's economy may be negatively impacted and contract from the estimated 2.36 percent to 1 percent.
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