Countermeasures of China_amp;_39;s economy

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					Countermeasures of China's economy
China's Shanghai University of Finance and Economics, Advanced
Research Institute Tian Guoqiang

2009, the Chinese economy to overcome the deteriorating external environment, their
own cycle of policy adjustment and the ups and downs last year, so many negative
factors, the large-scale government investment, the amount of credit in general, a wide
range of industries such as the revitalization of a series of strong macroeconomic
policies stimulation, the successful end of the third quarter of 2008 has accelerated the
trend decline has become the first international financial crisis bottoming out of the
country. Now it seems that the basic trend of China's economy and the
author in July 2009 an article by "increasing confidence and stability
between the two cities, pull both ends, excellent middle, expand domestic demand,
stimulated exports," the 18-word comprehensive approach comprehensive
management of 18 characters basically consistent approach.
However, the Chinese economy from the world and the current situation and future
trend of view, the Chinese economy began to rise again is not very solid foundation,
from the external environment, the world economic recovery has not yet quite strong,
Zheng Fu 大规模 经济 刺激 计划 implementation costs and potential risks to
have begun. This has brought two of China's economic dilemma: First,
stable economic growth and the adjustment of economic structure, the dilemma is to
maintain inflation expectations of economic stimulus and control dilemma. So, how to
solve these two dilemmas? In my opinion, this requires the Chinese government
embodies the forward-looking policy response, stability and progressive, in a timely
manner according to the process of economic recovery to make appropriate policy
adjustments, to achieve comprehensive management of a mild sound, can no longer
wait as the second half of 2008, as serious difficult situation again the policy of a 180
degree turn. Otherwise, it might make China's economy further into a
short-term ups and downs of the economic cycle, will increase long-term economic
restructuring and the changing way of the development cost of reform.
To this end, the author proposed in the paper, the implementation of short-term should
be "protection of confidence, stability between the two cities, Shen loose,
and promoting consumption, lead the public funding, expand exports," the
six countermeasures such as long should adhere to a market-oriented reform, speeding
up creating limited government and efficient markets, and thus need to correctly
handle the "government and markets, domestic demand and external
demand, investment and consumption, efficiency and fairness, national wealth and the
people rich, Fa Zhan and Wen Ding, urban and rural, coastal and inland areas present
and future, Ecology and Development "Ten Major Relationships, which is
essential to appropriately define the boundaries of government and the market,
leading to a market from a Government-led changes in the structure of economic
growth driving force fundamental change.
First, the current world and the general situation facing the Chinese economy
(1) showed a moderate recovery trend of world economy
In 2009, the world economy has gone through a difficult recovery from deep
recession to change. Currently, the world's major developed economies
have experienced positive growth. Data show that third-quarter U.S. gross domestic
product (GDP) growth of 3.5% annual rate for four consecutive quarters of economic
decline after the first positive growth. 16 euro countries and the EU-27 achieved the
third-quarter GDP were 0.4% and 0.2% growth, is expected out of the most serious
since World War II recession. The Japanese economy has experienced three
consecutive quarters of negative growth, respectively the second and third quarter of
2.3% and 1.2% growth.
Moreover, these key leading indicators of the developed economies are also showing
upward momentum. November 2009, U.S. manufacturing purchasing managers index
(PMI) was 53.6%; Eurozone PMI 53.0% from 10 months increased further to 53.7%,
reaching the highest point in two years; Japan PMI to 54.3%, are shown the trend of
expansion of economic boom.
(2) show China's economy bottomed out situation
China's economy from the performance of the four quarters of 2009, in the
first quarter, second quarter, third quarter gross domestic product (GDP) grew 6.1%,
7.9%, 8.9% in the fourth quarter is estimated that more than 10%, was evident by
quarter higher trend. If we compare the four quarters of 2008 were 10.6%, 10.1%, 9%
and 6.8% GDP growth rate, can be found in China's economic growth
shows a clear "V"-type reverse trajectory (Figure 1).

Figure 1 China's GDP in 2008 quarterly increase since the diagram (Source:
According to the National Bureau of Statistics data management)
From China's manufacturing purchasing managers index (PMI) point of
view, in November 2009 reached 55.2%, unchanged from last month, has for nine
consecutive months at 50% above the critical point (Figure 2) maintained a stable to
good posture.

Figure 2 Since 2008, China's manufacturing PMI chart change (%) (Source:
National Bureau of Statistics website)
Second, China's economic recovery in the world and the problems and
(1) The World Economy: a modest rebound in being chill zone
For the Chinese economy, external factors are not controllable factors, which need to
fully consider the potential worst case. Can be seen from the following aspects, the
world economy, especially some of the major developed economies are still weak
recovery basis, the lack of strong support for sustainable strong recovery.
First, instability in the financial system. Large U.S. non-bank financial institutions
and local banks bankruptcy still occur. For example, the recent hundred years of
history of the United States has the largest lender to small businesses CIT Group
formally filed for bankruptcy protection. If the group bankruptcy, will affect nearly
one million small and medium enterprises. Since 2009, the number of U.S. bank
failures have been more than 130, a large number of small and medium banks
struggling for its survival. Commercial real estate non-performing loans is one of the
reasons for the majority of bank failures. It is estimated that in 2010 the United States
will have more than 500 billion U.S. dollars of commercial real estate loans to
maturity, if the commercial real estate prices will still continue to fall, it may be that
more local banks collapse. Once the financial system stability and efficiency can not
be guaranteed, with its strong external economy, the basis of economic prosperity,
confidence will be difficult to guarantee.
Second, high level of unemployment. October 2009, the U.S. unemployment rate
reached 10.2%, to nearly 26 years to a new high. While November's
unemployment rate of 10% has been relatively slight decrease last month, but still at
historic highs. According to statistics, since December 2007 in recession now, the
United States has added more than seven million unemployed, is 30 years of last
century the most serious since the Great Depression. 16 euro countries and the EU-27
unemployment rate were 9.8% and 9.3%. According to EU forecasts the
unemployment rate in the euro area in 2010 from 2009, about 9.5% to about 10.7%.
This was no job growth will inevitably bring about weak consumer demand, leading
to economic recovery is insufficient.
Third, weak consumer demand. As the financial crisis, the major developed countries
sharply diminished financial assets of residents, residents of the balance sheet has
been adjusted and repaired in the short term, demand will not be a big upgrade. Data
showed U.S. consumer confidence index in November is only 49.5, was still hovering
low. According to Bank of America economist Heerweien expect the fourth quarter,
consumer spending growth will be only 0.5%. Coupled with a series of consumer
stimulus will be ready for renewal, the U.S. consumption growth is still not optimistic.
This leads to a consequence, U.S. residents began to adjust the structure of assets and
liabilities, lower consumption, higher savings, if the continuation of this trend has
been will trigger a global economic structure new equilibrium.
Fourth, the financial situation deteriorated. Ended September 30, 2009 fiscal year, the
U.S. federal government budget deficit reached 1.42 trillion U.S. dollars, is the last
fiscal year 459 billion U.S. dollars budget deficit to 3 times its size to create a new
high of nearly half a century. In the new financial year 2010 the first two months (ie
October 2009 and November), the scale of the U.S. deficit has already reached 296.7
billion U.S. dollars. Expected full year 2009,

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