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| Strong recovery boosts many |
It is really refreshing news for us to hear China's economy is being put on the fast lane again, after a 10-day domestic and foreign media blanket bombardment of the Urumqi deadly rioting. That the country's GDP surged by an eyeball-grabbing 7.9 percent from April to June, and that is on track to hit the goal of more than 8 percent at the year end, has brought smiles to equity investors, whose jitters about a lingering global recession is suddenly dispersed.
The light of hope, following a year-long crushing economic crisis hardly seen ever since the American Great Depression (1929-32), will keep beaming in the months to come. The world has found deeply-needed assurance in the regained dynamics with the third largest economy, which points to a dawn of genuine recovery from a severe slowdown.
For China and its leadership, it is imperative to keep the hope live by continuing its powerful fiscal and monetary stimulus policy, and implement even better "fine-tuning" of all kinds of economic instruments at their disposal to extend the momentum.
Even a quarter or a month ago, many in the world still had no idea where the bottom was. Nevertheless, China's strong and solid growth reported by the National Bureau of Statistics, is to accelerate confidence of business and consumers at home and abroad. After all, it is corporate investment and public consumption that moves the economy and create urgently cried-for jobs.
Now, the trend turns clearer that China and the United States are to inspire each other and become the first two major economies to be catapulted out of the economic quagmire. More will hop the two will lead the world to exit from the crisis.
Prompt intervention by the Chinese central government upon the downfall of the Lehmon Brothers in September has proved to be critically effective and efficient. Armed with a very proactive fiscal and banking policy, China weathered the brunt assault of the crisis at the end of 2008 and early this year, fought back a credit squeeze with lifting the sluice of lending curbs, and combated dried-up overseas demand for Chinese goods with government incentives at home to shop for a wide range of commodities, including electric appliances, computers and autos.
The time the downward spiral was arrested in March, the government anted up efforts to spruce up structural reform and technological advance of the country's major industries, including textile and apparel, telecommunications and broad band network, new energy research and production, machinery, electronics and shipping. The frequency that China's State Council, which Premier Wen Jiabao leads, convened cabinet meetings in Beijing during the period is hardly comparable in history, greatly boosting public confidence.
A mere glimpse into the numbers verifies the strength of China's anti-contraction efforts: pumping 7.37 trillion yuan of credit to the financial system by the banks in the first six months of 2009, plus a massive 4-trillion fiscal stimulus from the central and provincial governments. The draconian gambit was taken not with risks, but the 1997-98 Asian Financial meltdown has taught the country a lesson: China must take whatever in its capability to avoid a repetition of sub-par growth of 4 percent in 1998.
Some have advocated the leadership and the central bank pay due attention to watch for a potential inflationary pressure, once the crisis is put behind us. However, the minus 1.1 percent CPI decline in the first half year, coupled with an even bigger drop in industrial products prices, amplifies the mainstream belief that inflation won't arrive till the end of this year, and the government needs to stick to its current policy to shore up a rather nascent recovery. The past mistake of withdrawing stimulus prematurely and putting on pedal to curb credit ought to be avoided.
And, China needs to safeguard a social tranquility and relative harmony in order to sustain even strikingly plausible economic progress. The law enforcement officers must always be vigilant for any turbulent eruptions, and ensure a benign environment for economic advance. |
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