Sat, 26 Feb 2000

China's economy

I would like to comment on Mr. Christopher Lingle's article Politics meddle in China's economic dilemma ( The Jakarta Post, Feb. 14, 2000).

He wrote that the proportion and volume of nonperforming loans (NPL) within China's banking system were probably greater than in Indonesia, Japan or Thailand. I was puzzled by this statement.

The generally acceptable estimate of China's NPL is about 30 percent of the portfolio. And China's GNP now is also only about 3 percent (at about US$990 billion) of the world's GNP compared with that of Japan which is about 12.5 percent to 14 percent (almost $4000 billion depending on the yen/dollar exchange rate) of world GNP. The Japanese NPL in 1998 was reported as $550 billion, but it was estimated to be much more than that.

He wrote that over the past 20 years the average rate of return on investment by foreigners in China is less than 2 percent, whereas he also wrote that manufacturing overcapacity has driven down average return on investments by SOEs to less than 5 percent.

The Asian Wall Street Journal of Feb. 15, 2000 and Feb. 22, 2000, reported that the top 10 Chinese equity funds have one year return of triple digits; even the five lagging performers have one year return of double digits. The one year return of the respective funds are as follows: Impac AP GR China + 182.91 percent; JF Greater China + 129.30 percent; Lodier Inv-GTR China A=126.59 percent; CMG TS GUF-China Gth = 126.18 percent; ACM NA- GrChina/HK A= 124.82 percent; JF China = 123.58 percent; Fleming FF-China = 120.94 percent; CMG first at-Reg Chi = 120.58 percent; Polaris China fund = 117.97 percent; EV medal - Gtr China A = 110.47 percent. And the lagging five have the following 1 year return: RG Zelfsel-China = 17.36 percent; Dao Heng China = 27.54 percent; Sogelux eg-China = 40.48 percent; Manulife GI-China Val = 40.56 percent; USS (Lux) Eq-Gr China = 56.44 percent. The above are quoted from The Asian Wall Street Journal of Feb. 22, 2000.