''To protect ourselves against the effects of the Asian financial crisis, we adopted a policy of increasing investment and boosting domestic demand at the beginning of last year,'' he told the delegates to the National People's Congress. ''However, the crisis became broader and deeper than we had anticipated, exerting more of an impact on China than we had expected.'' Last year, the Government offered more than $12 billion in loans to underwrite investment in infrastructure. Mr. Zhu said the 1999 budget deficit would be about $18 billion, compared with $12 billion in 1998. Mr. Zhu's speech to the Chinese Parliament, meets for two weeks each spring to approve proposals presented by the party, was essentially the Prime Minister's public progress report on the ambitious reforms he proposed a year ago -- before the full impact of the Asian crisis and this year's devastating floods in China hit. The Parliament will also consider several constitutional amendments, including one that elevates the status of private business. Last year, Mr. Zhu's proposals included downsizing bloated Government by 400,000 employees, pruning its 300,000 inefficient industries through sell-offs and mergers, and doing away with housing in cities by July 1998. But even then, some of the reforms were regarded as almost impossibly ambitious. And while Mr. Zhu noted substantial progress in some areas, like bank reform and the formation of a social security system, he acknowledged setbacks. He alluded to the fact that the sell-offs of small state-owned industries have been mired in corruption, saying: ''We must resolutely stop erroneous practices such as selling them off for a nominal price while in fact giving them away.'' He did not mention that, at a time of widespread layoffs, his housing reforms have been at least temporarily shelved.
''To protect ourselves against the effects of the Asian financial crisis, we adopted a policy of increasing investment and boosting domestic demand at the beginning of last year,'' he told the delegates to the National People's Congress. ''However, the crisis became broader and deeper than we had anticipated, exerting more of an impact on China than we had expected.'' Last year, the Government offered more than $12 billion in loans to underwrite investment in infrastructure. Mr. Zhu said the 1999 budget deficit would be about $18 billion, compared with $12 billion in 1998. Mr. Zhu's speech to the Chinese Parliament, meets for two weeks each spring to approve proposals presented by the party, was essentially the Prime Minister's public progress report on the ambitious reforms he proposed a year ago -- before the full impact of the Asian crisis and this year's devastating floods in China hit. The Parliament will also consider several constitutional amendments, including one that elevates the status of private business. Last year, Mr. Zhu's proposals included downsizing bloated Government by 400,000 employees, pruning its 300,000 inefficient industries through sell-offs and mergers, and doing away with housing in cities by July 1998. But even then, some of the reforms were regarded as almost impossibly ambitious. And while Mr. Zhu noted substantial progress in some areas, like bank reform and the formation of a social security system, he acknowledged setbacks. He alluded to the fact that the sell-offs of small state-owned industries have been mired in corruption, saying: ''We must resolutely stop erroneous practices such as selling them off for a nominal price while in fact giving them away.'' He did not mention that, at a time of widespread layoffs, his housing reforms have been at least temporarily shelved.