China nears financial crisis

A financial crisis and massive unemployment in rural areas could pose major threats to social stability, a senior Beijing adviser says.

The warning was delivered by Cheng Xuebin, head of an investigation bureau with the Urban Survey Team, part of the National Bureau of Statistics, and reported in Banyuetan, a biweekly magazine run by Xinhua. The article was picked up and displayed prominently in tomorrow's editions of the South China Morning Post.

TRENDING: Athlete files lawsuit alleging she was forced off team for refusing to kneel

Cheng said providing social security and safety are major obstacles undermining China's effort to achieve prosperity by 2020, a target laid down by President Jiang Zemin in his 16th party congress report.

Although China had successfully weathered the shock of the 1997 Asian currency crisis, further problems could lie ahead, he wrote.

"Although the Chinese government has successfully avoided this crisis, we should remain alert," Cheng wrote. "The bad-debt rates of the four national banks are above 20 percent, and they are pretty high."

Cheng, who is in charge of collecting data for policymakers, said there were about 150 million rural jobless, according to the most conservative estimates.

"The dependence of our economy on the world's economy is more than we imagined, and foreign trade has contributed to an important share of our economy," he wrote. "Particularly after the entry of the World Trade Organization ... if the world economy is in a state of recession or stagnation, can China's economy maintain a consistent, rapid and healthy growth?"