In addition, we are somewhat hopeful commodity prices will continue to recover, further aiding health of basic industries. Certain reform measures should have an immediate impact . Foreign investment, in particular, should see strong growth this year due to China's pending membership in the WTO, the planned opening of some equity exchanges to foreign investors, improved taxation and lending rules for foreigners and private enterprises in general, and better rules for financial reporting, which will increase financial transparency and should encourage more investment. No negative shocks to confidence appear to be in the offing . We do not expect any substantive tax hikes in 2000, or a debt crisis.
Conventional wisdom overstates China's fiscal problems.
But in a calm external environment, China should have little difficulty selling bonds to shore up balance sheets of weak state banks and working out those banks' problems on a multi-year time scale. Growth will continue to be concentrated in the coastal provinces .Guongdong province and the cities of Beijing and Shanghai should continue to outperform the rest of the country, posting double-digit growth. Only 100 million out of China's 1.2 billion people are considered a part of China's consumer society and they are centered in these areas. In many provinces, the majority of industrial production derives from anachronistic state factories, and in the western region of China infrastructure remains sparse or nonexistent. China's biggest policy challenge in the coming decade is to provide these disparate regions with appropriate policy tools.