Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, July 31, 1993 TAG: 9307310099
SECTION: NATIONAL/INTERNATIONAL PAGE: A-3 EDITION: METRO
SOURCE: Los Angeles Times
DATELINE: WASHINGTON LENGTH: Medium
In its annual report on the Chinese economy, the CIA said that inflation is at a four-year high, with the cost of living increasing by nearly 20 percent a year in urban areas. This is taking place, the intelligence agency said, at a time when China is "approaching a political watershed" because of the poor health of the elder generation of Chinese revolutionaries such as paramount leader Deng Xiaoping.
"Throughout the past year, authorities have . . . been faced with sporadic local demonstrations in both urban and rural areas, which are a constant reminder of the potential for inflation [and] corruption . . . to spark wider protests," the CIA reported. "Even reformist leaders realize that their own political futures could be jeopardized by social unrest if economic overheating is not checked."
While pointing out some of the economic similarities to China's 1988-1989 period, the CIA did not go so far as to predict a repetition of that era's massive political upheavals - in which crowds of hundreds of thousands engaged in anti-government protests in and around Beijing's Tiananmen Square. After several weeks of hesitation, the regime brutally suppressed those demonstrations.
Martin Petersen, director of the CIA's Office of East Asian Analysis, told the congressional Joint Economic Committee on Friday that there have been reports in recent months of rural unrest in at least 13 of China's 30 provinces, and that some urban factory workers have staged strikes over wages or working conditions.
However, Petersen went on, "Beijing has, since Tiananmen [the 1989 demonstrations], concentrated on upgrading its internal security capabilities and has not hesitated to use its security forces in dealing with public disturbances."
The CIA said that China's economy has been growing at an annual rate of 13 percent a year since the beginning of 1992, boosting living standards and creating many new job opportunities. One factor in the rapid growth was $11 billion in new foreign investment committed last year, the overwhelming share of it from Asian companies based in Hong Kong, Taiwan and Japan.
But the report said China's economy is now in danger of seriously overheating, creating problems such as inflation, strains in the transportation and energy sectors, and a surge in demand for imported consumer goods.
Although the CIA said China faces serious short-term problems, it offered some more optimistic prospects over the long run. "China enjoys strong prospects for further growth," the report said. "Indeed, vast areas of the country are still at early stages of development."
Addressing a troublesome issue in relations between the United States and China, the CIA told Congress that China will have a record surplus of more than $23 billion in trade with the United States this year. That would represent a stunning increase of 30 percent over the surplus of $18 billion in 1992 - which Congress claimed was unacceptable.
"The trade deficit with China is soaring out of sight," Sen. Jeff Bingaman, D-N.M., said at Friday's hearing. "If China won't change its [trade] policies, then we need to change ours."
The steadily mounting trade surplus with the United States is particularly striking because China is now running a slight trade deficit with the world as a whole. And Lee Zinser, the CIA's division chief for China analysis, said that China "still hasn't reached anywhere near its export potential."
by CNB