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Chinese economy able to get out of jaws of crisis

(Xinhua)
Updated: 2008-12-25 18:33

Although the chill the financial crisis has sent down the spines of many in China in the Christmas season, some experts have found cheer in the economy's prospects.

Zhuang Jian, senior economist with Asian Development Bank's China Resident Mission, said China had weathered many difficult times since reform and opening up began 30 years ago and "was also able to escape the jaws of the financial crisis this time".

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With the deepening of the financial and economic crisis, the export-driven Chinese economy saw its export slide 2.2 percent year-on-year last month, the first monthly decline since June 2001, trailing its first monthly fiscal revenue decrease for 12 years this October.

What is also slowing the pace is the country's utilization of foreign direct investment (FDI). It declined 36.52 percent year on year in November to $5.322 billion.

To slow the economic downturn, China rolled out a stimulus program of 4 trillion yuan ($586 billion) last month, cut interest rates five times since September to pump up growth, and unveiled a real estate stimulus package last week.

Lansi Jiang, vice president of Volvo (China) Investment Co Ltd, told Xinhua some of her friends from foreign-funded companies compared the stimulus program and other stimulating measures to the "fireworks in the Beijing Olympics" which brought hope to people.

She pointed out that China took the crisis as a good time for economic restructuring and would lay more importance on sustainable development, energy saving and environmental protection, adding that her company already had many projects in these areas in China.

Zhang Yansheng, head of the foreign economic research institute of the National Development and Reform Commission, the top economic planning body, said as the effects of Chinese government's macro-management policies gradually surfaced, the world's fourth largest economy might recover in the second half of next year, sooner than other major economies.

"China lacks no market or demand. What it needs to do is to keep up confidence and turn the potential domestic demands into market opportunities," Zhuang said.

Zhuang said to maintain economic growth was the short-term goal for the country, while China needed to upgrade its exports products mix and economic structures and increase citizens', especially farmers', consumption for the long run.

With many export-oriented enterprises already feeling the pinch from flagging world demand, the country was turning its attention to the domestic market with a 1.3 billion population.

A subsidized household appliance program kicking off in Chinese rural areas since last December attracted the limelight from both home and abroad.

The government promised to grant a 13 percent subsidy for colour TV sets, refrigerators, mobile phones, washing machines and ice boxes for farmers' when buying these household appliances to improve 900 million rural residents' living and boost domestic consumption.

Samsung, Panasonic, Nokia and other foreign brands were on the list with leading domestic electronic manufacturers snapping the bigger share of the cake that was estimated to grow to as large as near 1 trillion yuan in the coming four years.

Panasonic said it was doing its best to cut its production cost of refrigerators to 2,500 yuan -- the threshold price set by the government.

Ou Minggang, deputy editor-in-chief of "Chinese Banker" magazine, said China's development still had great room as the country was still on its fast track of industrialization, urban construction and consumption structure upgrading.

Mei Xinyu, a trade expert with the Ministry of Commerce, pointed out the financial crisis made it more difficult for Chinese economy restructuring.

"Only through a bigger boost from domestic demand, can we improve Chinese people's income and create more demands for new products," Mei said.

He added that also through economic restructuring and export upgrading, China could turn itself from a big trade country into strong trade nation.

Although export is a major engine for the country's gross domestic product (GDP) growth, more than 60 percent of the world factory's exports rely on orders from foreign countries.