China

SOCCER IN CHINA China is long known as a nation of outstanding pingpong players and gymnasts, but never gained a reputation in soccer! However, this is the first time ever in history that China’s national team has made it to theWorld Cup. This is in its own right a cause for celebration. Remember the fireworks in Beijing? China indeed has come a long way. Soccer as a sport started to become popular only in the early 1980s. A shortage of good coaching and severe constraints in facilities have slowed its development. Our GS economist attended China’s top and best funded university which, in the early 1980s, had only one soccer field on sand, not on green grass, for its 10K plus student population. As China’s economy grows, however, funding has become available to build more and better soccer fields. More and more Chinese kids are giving up ping-pong for soccer which they find more exciting. Today there are a half dozen or so professional soccer clubs across the country. Each soccer gameis aired live on nationalTVnetworks and it is common for good teams to receive generous corporate sponsorship with good players getting hefty bonuses, very much following the Western trend. It is estimated there are over 100 million declared soccer fans, according to a Chinese internet survey. The nation went wild when the Chinese national team qualified to participate in the World Cup for the first time. Regardless of China team’s performance at the World Cup, we predict soccer, already one of the most popular sports, is going to stay in China for generations to come. THE STATE OF THE ECONOMY Not surprisingly, China has a lot more reason to celebrate its economic performance than its achievement in soccer so far. The economy bucked the global trend last year to achieve 7.3% real GDP growth. The government’s new budget, unveiled in March, projects 3% of GDP in deficit spending, mostly for public infrastructure such as highways, bridges, and ports. Massive public investment and a recent cut in interest rates by the People’s Bank of China should keep domestic demand growing at a healthy speed. Most encouraging is a strong pick-up in exports, which rose more than 14% in the first two months of this year, by far the best performance in Asia. Foreign direct investment has also continued to rise. While we continue to expect China to finish 2002 with 6.8% in real GDP growth, latest data point to some upside risk to our current forecast. STATE OF THE NATION The first time entry intoWorld Cup marks just one of the many noteworthy events for the Chinese nation. China has finally cemented its membership at the World Trade Organization as reward for its 16-year marathon bid. Beijing has been selected as the host city for the 2008 Olympics. In fall 2002/spring 2003, President Jiang Zeming and Premier Zhu Rongji are expected to retire and pass the baton to the next generation of leaders.We expect the transfer of power will go smoothly and there will be policy continuity and political stability ahead under the new leadership. China will continue to move forward towards a free market economy and as the WTO, World Cup and Olympics show, further integrate into the world. THE 2002 WORLD CUP China makes its debut in theWorld Cup this year, butmay not progress well particularly given it is up against well established teams in the first round. But this will unlikely deter the tens of thousands of Chinese fans from travelling to South Korea celebrating the coming out party for their national team. Previous Appearances No Previous Appearances