BEIJING, Dec 13: China’s economy is expected to face “severe difficulties” in the country’s first year as a member of the World Trade Organization (WTO), a senior economics minister said on Thursday.

“China is joining the WTO at such a time that the major economies in the world, mainly the US, EU and Japan, are experiencing economic slowdown,” said Zhang Zhigang, vice minister of the State Economic and Trade Commission.

“Such an economic situation will impose severe difficulties for our own economic growth next year.”

Speaking to reporters two days after China officially joined the global trade body, Zhang suggested a rough road ahead for the country, at least in the short-term.

The economies of the United States, Europe and Japan make up 70 per cent of the total world economy and their slowdown will have a big impact on China, Zhang said.

Trying to keep China’s economy stable will be a particular challenge while the country opens its economy to unprecedented competition under the terms of WTO membership.

“For the next year, we’ll have a tough situation,” Zhang said at the news conference.

The biggest impact would be on China’s exports, he said.

The US, European and Japanese economies are major markets for Chinese exports, which have already suffered due to the global economic downturn.

China’s trade surplus fell 13 per cent in the first 11 months of 2001 from the same period last year, according to official statistics.

Exports in the first 11 months rose 6.3 per cent, a figure down dramatically from a growth rate of 30.1 per cent in the same period of 2000.

Zhang said, however, that Chinese officials remained optimistic the government’s plan to maintain domestic demand through a continued policy of massive pump-priming, which began in 1998, would ease the pain.

“So in the future, we’ll continue the proactive fiscal policy, the stable monetary policy and make the increase of domestic demand a major driver of our economic growth,” he said.

Boosting domestic consumption would be a long term strategy, Zhang added, predicting China could achieve the growth target of 7.0 per cent the government has set for 2002.

GDP growth this year is estimated at 7.4 per cent, against 8.0 per cent in 2000.

To achieve next year’s objective despite the threat to the export sector, China plans to boost its spending on infrastructure projects and other areas such as social security, sources close to Chinese economic planners said.—AFP