China’s economy held the line on growth in 1999, mainly with government assistance, as the economy continues to suffer from the effects of massive, and accelerating, restructuring. The coming year could see some improvement, though the economy is likely to remain under stress as the restructuring intensifies over the next three to five years.
Large-scale job loss and gluts of consumer goods are still dampening demand, but deflation has begun to flatten out. Recovery in the rest of Asia helped keep exports strong, though foreign investment dipped (see Trade and Foreign Direct Investment).
China’s preparations to enter the World Trade Organization (WTO) will accelerate the pace of the toughest reforms yet in agriculture, the state-owned sector, and banking, among others. Economic performance depends in large part on how well China implements these reforms and on non-state sector growth. Foreign firms are also likely to see these reforms as crucial, as WTO implementation is deeply entwined with these issues. Notes