November 18, 2002
A Tale of Two Countries
On November 14, 2002, the Chinese Communist Party wrapped up its 16th Party Congress. Its goal is to quadruple the gross domestic product over the next 20 years, on top of an eightfold increase during the previous 24 years. The implied growth target of 7.2 percent per year on the average does not seem to be unrealistic. An estimated growth rate in 2002 is at least 8 percent, the rate was 7.3 percent in 2001, 8.0 percent in 2000, 7.1 percent in 1999, 7.8 percent in 1998 and around 10 percent per year on the average for two decades before. Outgoing party chief Jiang Zemin's report to the Congress called for the protection of all legitimate income, and emphasized the importance of maximizing value added throughout the economy.
Miles to the Northwest, on the same day, the International Monetary Fund released the first of a series of publications on the subject "Russia: Tendencies in the Macroeconomic Sphere and Economic Policy." At a press conference, the head of the IMF's Moscow office urged Russia to intensify its efforts to reduce inflation, even below the country's stated target of 10% at the end of 2003.
There it isa tale of two countries. China grows at 8% a year, while the IMF tells Russia, which cannot even recover from the Great Contraction of the 1990s, to reduce inflation by a few percentage points.