China faces challenges from foreign investors
(AP)
Updated: 2006-01-26 15:32

China has become the third largest trading nation and the third largest recipient of foreign investment, but its per capita income is still lower than 100th in the world, China's Vice Premier Zeng Peiyan, overseeing the five-year plan, said in an address to the forum.

"The world economy is facing an increasing number of destabilizing and uncertain factors -- fiercer international competition, rising trade protectionism, an unfair economic order and a widening gap between the north and the south," he said.

Zeng called for greater global cooperation to combat global poverty and improve life for millions in China and around the globe.

"China cannot develop in isolation, nor can the world develop without China," he said.

In the new economic and social plan, Zeng said, China's first goal is to double the per capita income in 2000 by 2010, achieve greater efficiency in using resources and energy and curb ecological and environmental degradation.

Cheng said China's urban dwellers have become three times richer than their rural counterparts, and people in the east and along the coast are much richer than those in the west, so greater efforts must be made to narrow the gaps and "keep economic progress synchronized with social progress."

At last year's forum, a key issue was when China would re-value its currency, the yuan, and by how much. In July, it moved from a fixed rate against the U.S. dollar to a slightly more flexible system. Since then, the yuan has appreciated in value against the dollar by about 2.5 percent.

Victor Chu, chairman and chief executive of First Eastern Investment Group in Hong Kong, said a 25 percent increase in the yuan's value was likely over the next five years, but he hoped for a 30 percent appreciation -- and possibly 35 percent.

Chinese officials, however, were much more cautious.

"It's possible I would say, but (in) five years, the world changes too fast," Zhu said, cautioning that in the coming year the appreciation will be "very small."