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Finance Minister Asia

Jin Renqing, Finance Minister, China
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Given the opaque structure and workings of China’s government, it is difficult to discern who is ultimately responsible for policies and decisions. That the country appears set to engineer a soft landing to its rampant and possibly over-heating economy, deserves the thanks and praise of the world.

In the past three years, China has accounted for up to a third of global economic growth, which means any sharp slowdown there would be felt acutely throughout the world. But who should be congratulated for the feat of gently reining in the giant?

No doubt it has been a joint effort, a broad policy response shaped in the Party Central Committee. The move by the People’s Bank of China to raise interest rates in October 2004 – a move hailed by economists as indicating the Chinese authorities’ determination to slow the economy – singles out the bank’s governor, Zhou Xiaochuan, for mention.

However, The Banker takes the view that, given the Chinese economy’s heavily administered and controlled nature, and continued domination by thousands of state-owned enterprises, it is less responsive to market forces – the rising cost of capital in this case – than administrative diktat.

Consequently, The Banker awards finance minister Jin Renqing its Finance Minister of the Year for Asia award, in recognition of various measures aimed at controlling lending, particularly on construction projects, cutting back on low-priority plans and ensuring a reduction in over-investment.

On the back of the lending restrictions, China’s National Bureau of Statistics reported in November 2004 that the country’s industrial production grew at its slowest pace in 18 months. Overall, economic growth was down to 9.1% in the third quarter from a year earlier and from 9.7% in the previous three months.

Officially, China expects gross domestic product (GDP) will have grown by 9.3% year-on-year in 2004 and will grow 8.5% this year. The World Bank is forecasting GDP growth of 8% this year.

Mr Jin was also noted for his announcement to narrow the government’s fiscal deficit to a neutral level this year, neither constrictive nor expansionary. The fiscal deficit would remain about $36bn for the next three years but would decline relative to GDP.

The finance minister also said that the government would cut the volume of long-term treasury bonds for construction projects.

The moves are designed to maintain stable fiscal and monetary policies in 2005, to realise an “overall, co-ordinated and sustainable economic and social development”.

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