WB: China's economy faces challenges
(Agencies)
Updated: 2005-01-07 08:57

China's growing reliance on imported oil, pollution and looming water shortages pose the major threats to its economic development, a senior World Bank official said Thursday.

"The sustainability issues in China are the key issues in the next three to five years and the ones that are most likely to jeopardize its economic success," said Yukon Huang, a senior adviser to the bank who formerly headed its office in Beijing.

China is now the world's second largest oil importer, and it suffers from poor efficiency in turning oil into economic output — just 1/7 that of Japan, Huang said at a seminar organized by Singapore's Institute for Southeast Asian Studies.

If China "cannot improve in terms of its efficiency the cost will be unbearable," Huang said.

Economic growth — now running at about 9 percent, will likely fall to a more moderate 6 to 7 percent in coming years, Huang said, adding future growth would come less from new investment and more from greater productivity.

While China has cut industrial air pollution, the improvements have been offset by rising private car ownership, Huang said. China is now home to seven of the 10 worst polluted cities in the world, he said, saying that was something the country was "going to have to deal with."

Huang called growing pressure on dwindling water supplies China's "Achilles heel," saying that wouldn't be solved by projects under way to pump water from the relatively wet south and west to the arid north.

The struggle for water will lead to "a fight between rural interests, urban interests and industrial interests on who gets water in China," Huang said, adding some of China's rivers are too polluted to drink, fish in, or even use for irrigation.

Huang said such sustainability issues posed a much greater threat to China's development than political or economic risks such as the mountain of bad loans held by the nation's state-owned banks or the potential of conflict with Taiwan Province.

Yet he added that China had long proved itself able to overcome overwhelming odds in the past, standing alone among nations served by the bank in routinely exceeding development predictions.

"I don't know how or why," Huang said, "but I think that's the success for you for China."

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