By Hu Shuli
From Caijing Magazine
Spring is in the air, no doubt rousing many of the optimistic voices we’ve heard lately about the economic situation.
Some say that as soon as
government’s 4 trillion yuan stimulus plan hits the road, the most critical
stage of the current economic crisis in
There is another popular view: That easier credit will improve the vitality of Chinese enterprises and the private sector, triggering an unstoppable surge in growth. A rapid expansion in credit, a temporarily roaring stock market rally and rebounding steel prices all seem to support this bullish view.
We find it difficult to share this optimism. We remain deeply concerned about the latest economic trends.
But these advantages are
relative. Undeniably, the global crisis has engulfed
As the saying goes, fortune
is embedded in adversity. But the opposite is also true. As stormy winds buffet
the country, inside and out,
Most worrisome now is the economy’s downward slide and subsequent reactions. The official media reported January’s economic data with a positive slant, describing the situation with expressions such as “bottoms out” and “slightly warms up.” Such optimism is questionable.
This year’s Spring Festival
holiday period began in January, shortening the month to 17 working days. As a
result, some industrial production data were incomplete. During the same period,
industrial output in
More importantly, the economic crisis is deepening around the world. Not only have the dire financial straits failed to ease globally in recent weeks, but the crisis in manufacturing is spreading. The International Monetary Fund took an unusual step by slashing its global economic forecasts for 2009 twice over the past four months, from 3 percent in October to 2.2 percent in November, and again to 0.5 percent in January.
If the IMF’s latest prediction comes true, the world will experience the most sluggish growth since World War II. Some even predict negative growth, saying the economic slide could reach the level of the Great Depression in 1930s. Given the fact that the global economy faces daunting challenges with structural adjustment, further deterioration is possible.
It’s reasonable to expect a
time gap for stages of economic trouble between developed and developing
countries. November was the first month in which
Serious economists are offering conflicting forecasts about the Chinese economy. Some expect an economic recovery curve to follow a U-shape. But most say it will take a W-shape -- a worrying prospect indeed. There is scant evidence to support a V-shaped recovery, or the view that the Chinese economy has already risen from the bottom. Of course, experts will always express different views. But we should not let wishful thinking obscure reasonable analysis.
In fact, while enjoying
spring hopes and pining for economic recovery, we should focus on the quality of
Since the huge
At a recent meeting, the Politburo spelled out its goals of “expanding domestic consumption, maintaining growth, structural adjustment, improving quality, tackling reform, increasing vitality (of the economy), focusing on livelihoods and promoting harmony.” The overall message is clear, but expectations for a rollout of more stimulus policies are being heard in some quarters. If existing policies indeed aim to use investment to ensure growth – tossing 4 trillion yuan into national projects to stimulate growth -- then let consumer spending take the lead. Raise the consumer portion of the nation’s GDP by opening up the service sector, increasing social security payments, and reforming the household registration system. These are the kinds of steps that can turn the economy around. But these types of investments call for better awareness of the crisis, as well as more wisdom and courage.
So much hope is now being
pinned on the National People’s Congress as it convenes in
Full Article in Chinese: http://magazine.caijing.com.cn/2009-02-28/110075298.html