How far is China away from the crisis?

(Xinhua)
Updated: 2009-04-18 20:42

BOAO -- Much has been talked about signs of recovery in Chinese economy, but little is certain about long-awaited rebound.

Discussing the latest development of Chinese economy at the Boao Forum for Asia (BFA), worldwide officials, business executives and professionals remained prudent about China's 8-percent gross domestic product (GDP) target in 2009, but mentioned some favorable changes in the country's economy.

Bob Hawke, former prime minister of Australia, forecast China's GDP growth between 7 percent to 8 percent. In the meantime, he believed a reversal had come.

"The four-trillion-yuan stimulus (package) is now beginning to work, and China's economy ... has reached the bottom and started to come up now," Hawke told Xinhua at the forum.

Increasing stress of sluggish exports, dampened employment and shrinking corporate profits have pulled down the Chinese economy to a growth of 6.8 percent in the fourth quarter last year.

A favorable trend might be forming in the first quarter of this year. Ding Lei, president of Shanghai General Motors Corporation Ltd., observed increasing domestic demand for motor vehicles.

"Our automobile exports remain low, but auto sales gained 12.9 percent in the first quarter compared with the fourth quarter last year," Ding said.

"China's policy package to boost automobile industry has effectively activated domestic market, and boosted the confidence of companies," Ding said.

John Cleland, chief executive officer of WestNet Infrastructure Group that has resources products trade with China, also noticed "some increase in demand".

"It's very hard to say, but there are signs of recovery of (China's demand for resources products)," he told Xinhua.

"Stockpiles of iron ore and steel in China have been reducing, so hopefully some projects that were put on hold have come back in the line," he said.

"China will come through (the crisis) quickly. Resource demand will recover. The demand for iron ore and basic commodities will recover quicker than consumer economies," he said.

Stable growth can also be expected in infrastructure. As China builds its nationwide mobile network, considerable and stable job opportunities can be created, said Per-Olof Bjork, general manager of Greater China Affairs of Ericsson Group Headquarters.

However, the changes are mainly felt in industries covered in the government's stimulus package, and China might need to go through a more painstaking path to ensure healthy and stable economic growth.

Chinese economy has shown more optimistic signals in the first quarter, but there are many uncertainties, said Chris Morley, managing director of Nielson China.

One uncertainty is the grim global economic climate. The U.S. and European economies are struggling in the crisis, which means China has to seek more internal growth to make up for the loss in exports.

The first quarter continued to see a slash in exports, which declined 19.7 percent year on year. Exports used to be one of three major sectors driving the Chinese economy, but it contributed negative 0.2 percent to the country's economic growth in the quarter.

Existing problems made it more difficult for Chinese economy to stay away from the impact of global crisis.

Yao Gang, vice chairman of the China Securities Regulatory Commission,commented that China's economy is facing a key era that calls for upgrading in development pattern and adjustment of structure.

China's mission is not only to maintain stable economic growth, but also handle excess industrial production capacity, expand domestic consumption and reduce income gap, all of which demand sophisticated policies and persistent efforts from the government, Yao said at the BFA annual conference.

On April 15, China's Cabinet, the State Council, urged faster implementation of the two batches of government investment, and kicked off the third batch.

"Only approximately 30 percent of the scheduled investment has been injected into the Chinese economy," said Edgar Hotard, board chairman of Monitor Group (China). "If the rest 70 percent were also put into the economy, it would bring further growth."

Rolf D. Cremer, dean of China Europe International Business School, said China reacted more swiftly and decisively than expected, maintaining a relatively stable growth rate, which allowed more room for adjustment and reform.

Chinese economy was still on the growing path, with industrialization and urbanization acting as the two major growth engines, said Long Yongtu, secretary-general of the BFA.

"I have always believed that Chinese economy will stop its sliding trend in a comparatively short time and return on the track of stable and rapid development," he said.