29 March, 2003 - CHINA’S demand for Malaysian palm oil this year isexpected to surpass the 2.5 million tonnes it imported last year.

The higher expectation is in line with its strong economy, which isexpected to grow by between 7 per cent and 8 per cent this year, saidChina Centre for Economic Research Peking University director ProfessorJustin Yifu Lin.

He said demand for palm oil has been robust due to a strong growth of itsfood sector.

There is a boom in China’s biscuit, noodle and other food-makingindustries lately. Should our (gross domestic product) growth hit 7 percent, demand for palm oil will be much higher, Lin told reporters in KualaLumpur yesterday.

The economist was in Kuala Lumpur for a Malaysia-China trade relations atthe invitation of the MCA.

China was Malaysia’s top palm oil buyer at 2.5 million tonnes last yearand 1.8 million tonnes in 2002.

Lin also said there is no need for Malaysia to review its ringgit pegpolicy for the time being as it provides stability and a conduciveenvironment for the business community.

The peg has served Malaysia well and the Government should maintain it.Perhaps, what

Malaysia can consider is to peg it on a basket of currencies rather thanjust on the US dollar,” he said.

Lin said Malaysia-China trade relations had improved by 40 per cent in thepast decade such as in the electrical and electronics sector.

Malaysia produces the components which are then exported to many countriesincluding China. The republic in turn manufactures and assembles computersand other related equipment.

On another note, Lin said Malaysia’s companies should consider relocatingto China due to its cheaper labour and raw material costs.

When businesses improve, Malaysian firms can earn better in terms offoreign exchange earnings. China on the other hand can benefit from morejob creation, he said.