Thanks to 30 years of reform and opening up, China's comprehensive national power has strengthened and people's livelihood has further improved. However, the Chinese economic growth has slowed down dramatically as the ongoing global economic recession continues spread. The theme of peace and development faces grave challenges.
Tang Min, deputy secretary general of China Development Research Foundation noted that the crisis means opportunity and China, not the US will lead economic recovery.
China will lead economic rebound
Tang said the ongoing economic slowdown is the most severe crisis since the Great Depression in the 1920s. In light of the current situation, the downturn will keep prevailing and possibly become worse. Someone opportunistically estimated that the US economy will recover at the end of the year, but people generally think the recovery will not come until 2010. Moreover, it will take even longer for the European economy, particularly in the east of Europe, to rebound as the continent has replaced the US to become the center of global credit crunch.
Tang added that China, though greatly affected by the slowdown, is not the center of the crisis. The crisis has great impact upon global financial sector, but financial services in China are relatively healthy and stable. It is not because China is wiser than other countries; it is because China carried out reforms on financial and banking services years ago. In addition, China has taken prompt measures to deal with emergencies. Thanks to the four-trillion-yuan stimulus package, China will see earlier-than-expected economic rebound compared to the US.
"Now we need to work out not only solutions to tackle the crisis, but also ways to make use of the opportunities. China needs confidence in overcoming the slowdown, and moreover, in seizing the opportunity," Tang added.
Economy will possibly recover in the second half this year
"We must be careful when reviewing China's economic indexes in January and February this year," Tang said. "China's economy began to decline around the fourth quarter last year, and the economic growth in the first quarter this year keeps declining. It will take time for the four-trillion-yuan stimulus package to produce effect."
Whether China's economy, or the world's at large, will show signs of recovery is still unknown. But I personally think there is little hope for an economic rebound in the first six months of this year. It will be a very long process for China's stimulus package to produce results and the world's economy to recover.
Be careful with overseas buy up
Chinese enterprises that start to buy up overseas should be aware of the fact that the world economy is still on the decline. The world economic prospect is a good opportunity for China because we have two trillion US dollars in foreign exchange reserves. That huge amount of money can play a vital role in earlier recovery.
In view of the current international economic situation, all the central banks worldwide keep pouring money into the markets. That will definitely cause side effects. With such large amounts of money in the markets, inflation will occur when economic recovery comes. A round of global inflation will be inevitable in the next couple of years.
China, a country with the largest demand on resources and the fastest growing economy in the world, will suffer greatly from global inflation. "China should seize the opportunity and do research on markets, companies and changes in the market. Enterprises should not start to buy up overseas until the right time arrives," Tang said.
New stimulus package must be based on actual situation
Chinese government has prepared a bigger plan to cope with the crisis, and a new stimulus package will be issued if any emergencies arise. If the four-trillion-yuan stimulus package were not to produce any positive results, further stimulus package would likely be adopted. Additionally, some of the policies, such as setting up companies with private funds do not need government investment.
"I don't think it is appropriate to give money to all Chinese people. If the consumption coupon is needed, I think it should only be issued to those in need, such as farmers with low incomes," Tang said.
By People's Daily Online