"White Paper of China Foreign Economy and Trade in 1998" Indicates:
         Economy and Trade in the World: Reduced Growth Rate
           Economy and Trade in China: Severe Situation
                            By Wei Xin
The Ministry  of  Foreign  Trade  and  Economic  Cooperation  has  recently
published the White Paper of China Foreign Economy and Trade in 1998".  The
paper introduces the developments and  problems  of  foreign  economy  and
trade in China in 1997, analyzes the economy and trade in  the  world  and
projects the situation and prospects of foreign trade in China in 1998.
(1) The world economy made a rapid growth in 1997, and  the  growth  period
will still last in 1998. The financial crisis  in  Asia  will  produce  an
impact on the world economy. The growth rate of the global economy will be
remarkably reduced.
The overall situation of the world economy was good in 1997.  In  spite  of
the financial crisis in Asia, the economic growth in the United States was
high, the economy in Europe turned for  the  better  and  the  economy  in
developing countries was on the whole satisfactory. The growth rate of the
global economy was 4.1%, equal to 1996.
The growth of the world economy will not disappear in 1998 because  of  the
financial crisis in Asia, but the growth rate will be remarkably  reduced.
It is expected that the growth rate will drop to 3.5% and 1998 will be the
year of the slowest economic growth since 1994.
The economy of the United States, No. 1 economic power in the  world,   has
experienced a virtuous development status. The financial  crisis  in  Asia
will however force the economic growth of the United States to  slow  down
in 1998. It is expected that the growth rate will drop from 3.8% last year
to 2.4% in 1998. The economy of the European Union was recovered in  1997.
It is expected that the growth rate will increase from 2.6% last  year  to
3% in 1998, the first high rate since 1989. The economy  of  the  European
Union will probably hold the first place among the United States,   Europe
and Japan.   The  economic  situation  in  Japan  is  still  severe.   The
aftereffect of the rubble economy and the financial crisis  in  Asia  caused
the economic growth rate in Japan to be only 1.0% in 1997. It is  expected
that no great changes will take place and there will be  hidden  recession
in 1998.
  The economy of developing countries was brisk in 1997.  Affected  by  the
financial crisis in Asia, the economic growth rate in developing countries
will have some reduction in 1998. The GDP of Russia increased by 0. 5%  in
1997, bringing to an end  of the 7-year-long economic slump.   There  will
still be a lot of problems and uncertain factors in the economy of  Russia
in 1998.
(2) Affected by the reduced growth rate  of  the  world  economy  and  the
financial crisis in Asia, the growth rate of the world trade will also  be
reduced in 1998 and the aggravating trade  imbalance  will  intensify  the
trade competition.
  The white paper indicates that the growth of  the  world  trade  in  1997
reversed the declining trend in the previous year. The  expansion  of  the
world trade liberalization greatly reduced trade  barriers.   The  adverse
impact of the financial crisis in Asia on the  world  trade  will  further
manifest itself in 1998. The growth rate of  the  world  trade  volume  is
expected to be 2 - 3 percentage points lower than 1997.
  It is also pointed out in the white paper that there  will  be  following
two development trends in the world trade: (i) Some new changes will  take
place in the world trade pattern and the trade imbalance will continue  to
expand. (ii) The aggravating competition in the international market  will
possibly lead to the rise of trade protectionism. (iii)  The  World  Trade
Organization will conduct its work according to its set agenda.
(3) Foreign economy and trade will play  a  more  important  role  in  the
national economy in China.
  China was listed in the first 10 countries of the world trade in 1997 for
the first time in history. The amount of foreign direct  investment  China
actually absorbed had an increase. The amount of foreign capital  utilized
reached 45.26 billion U.S. dollars, a rise of 8.47%. Reform was  conducted
in foreign aid modes and steady progress was achieved in foreign aid work.
Remarkable achievements were made in foreign  economic  cooperation.   New
progress was made in the  implementation  of  the  market  diversification
strategy and  the  reform  of  the  foreign  economic  and  trade  system.
Multilateral and bilateral  economic  and  trade  relations  continued  to
develop. A sound development was  made  in  1997  in  economic  and  trade
relations between China and the United States, between  China  and  Japan,
between China and Europe, between China and Russia and between  China  and
international economic and trade organizations.
  It is indicated in the white paper that  foreign  economy  and  trade  in
China played a more important role in modernization construction  in  1997
and became a major driving power of the national economic growth.
(4) Foreign economy and trade in China will face a severe situation in 1998.
  The white paper points out that foreign economy and trade in  China  will
face a severe situation in 1998.  Factors  causing  a  difficult  economic
situation both at home and abroad in the past few years will still  exist.
What is more important, we should never underestimate the  adverse  effect
of the financial crisis in Asi