THE Chinese authorities acknowledged yesterday that almost half of its urban population had become poorer in the last year, a phenomenon which observers partly blame on problems in the stagnant state sector.
The news comes on the heels of a recent World Bank reassessment of the number of poor in China, using more stringent standards than before. It now puts the number living below the poverty line at 350 million in a population of 1.2 billion, three times the earlier estimates.
However, China appears to be on target for a soft landing after years of breakneck growth, according to figures issued yesterday in Beijing. The economy grew by 9.6 per cent in the first nine months of 1996, the State Statistical Bureau said.
Optimism over the economy has been boosted by predictions that there will be a bumper grain harvest this year, and by the success of a policy of tight credit aimed at curbing inflation and cooling down an overheating economy.
Western economists and diplomats in Beijing believe the growth rate may be lower by one or two percentage points than the official figure, and that Chinese calculations reflect political concerns about maintaining a sustained growth rate.
China has been importing large quantities of wheat and rice from Australia and Vietnam, which one diplomat said was not consistent with official expectations of a larger than expected harvest.
Mr Ye Zhen, spokesman for the statistical bureau, said that grain output this year would exceed 480 million tonnes, beating the 1995 record by 15 million tonnes.
Mr Ye told a press conference yesterday that inflation had been brought down to 6.6 per cent in the first three quarters. "The development of the macro economy overall appears good," he said. Gross domestic product was 4.5675 trillion yuan (£344 billion) between January and September, up 9.6 per cent from the same period of 1995. Last year it grew by 10.2 per cent.
The average income for urban Chinese rose to 3,249 yuan between January and September, an increase of 3.4 per cent, added Mr Ye. He said, however, that the incomes of many urban residents were lagging behind.
A survey of 35 major cities and towns had revealed that the incomes per family member of around 40 per cent of households had declined.
In half the families surveyed, the level of income fell or the level of income growth could not keep up with inflation, and "the difficulties of some low income urban families have been aggravated". This was taken as a reference to the phenomenon of millions of workers in China's state concerns being told to stay at home on minimum salaries as the state sector stagnated.
The squeeze on credit has also meant that some big construction projects have been halted and workers laid off. Idle state sector workers are not included in official unemployment rate, which in urban areas reached 2.98 per cent at the end of September. Mr Ye said the number of unemployed in Chinese cities reached 5.3 million.
State newspapers have warned that unemployment could reach 7.4 per cent by the year 2000. Some observers say the real unemployment rate in some Chinese cities is as high as 20 per cent, a major worry for the Beijing government.
"President Jiang Zemin has said in the past that sustained economic growth is the key to social stability and it must stay above 7 per cent to avoid large scale social problems," one diplomat said. "The published figures should be assessed in this light."
