Mon, December 21, 2009
Business > Economy

China wins applause as economic recovery accelerates

2009-12-20 08:57:20 GMT2009-12-20 16:57:20 (Beijing Time)  Xinhua English

BEIJING, Dec. 20 (Xinhua) -- China's economic data for November, with some key indicators beating market expectations, have sent clear signals that China's economic recovery is accelerating and broadening.

As a "rainbow" of the recovery emerges at the end of 2009, China has been won applause at home and abroad.

At Yuhang, an export-oriented district in eastern Zhejiang Province, one of China's export hubs, Party chief Zhu Jinkun was smiling and composed.

But at the beginning of this year, things were quite different.

"I was very frightened at that time. I feared of factory closure or production suspension, which meant workers would lose their jobs. It could cause social instability," he recalled.

Yuhang is home to nearly 9,000 enterprises which hire more than 800,000 workers. As one of most economically-developed and export-oriented counties in Zhejiang and China at large, it was also one of the hardest hit county-level economies amid the financial crisis.

When overseas demand slumped in the first quarter, 908 out of Yuhang's 2,077 large industrial enterprises (those with annual revenue of more than 5 million yuan, or 732,000 U.S. dollars) suffered loss, according to Zhu.

"Yuhang's GDP edged up only 1 percent in the first quarter. We had not seen this for decades," said the 53-year-old official.

Yuhang was then part of a gloomy national economy as slump overseas demand crippled China's essential export and related manufacturing activities.

Nationwide, tens of thousands of companies closed down, forcing millions of migrant workers out of job. Consumers' and investors' confidence dived to record low in more than 10 years.

That was why quite a few people remained suspicious when Premier Wen Jiabao said in March that China aimed to achieve about8-percent GDP growth in 2009, which the government has long believed is essential to generate enough.

In the first quarter, China's GDP rose 6.1 percent year on year, the lowest since the introduction of quarterly GDP figures in the fourth quarter of 1999.

But also in the first quarter, China began implementing its massive economic stimulus package, featuring a two-year investment plan worth 4 trillion yuan (585.6 billion U.S. dollars), which was adopted in November last year, right after the outbreak of the financial crisis. It also adopted more pro-growth economic policies such as expanding the "home appliances to the countryside" program.

Also in the first quarter, China pumped 4.58 trillion yuan new loans to stimulate the economy, about 90 percent of the annual target of 5 trillion yuan.

Jia Kang, president of the Institute of Fiscal Science of the Ministry of Finance, said as the financial crisis battered the export, China moved to boost investment in infrastructure such as high-speed railways and domestic consumption like car sales, so as to drive economic growth.

Jia said a quick implementation of the stimulus package had successfully reversed the downward trend of the economy and quarterly GDP growth had picked up notably in the first three quarters.

"When the 8.9 percent GDP growth for the third quarter was released, it cleared away panic in the market," he said.

Official figures showed China's GDP grew 8.9 percent year on year in the third quarter, accelerating from 7.9 percent in the second quarter and 6.1 percent in the first. For the first three quarters, the annualized GDP growth reached 7.7 percent.

"There is no doubt that China can achieve the 8-percent growth target. Most economic figures look very good," said Jia.

According to the National Bureau of Statistics, China's industrial output in November, which measures the activities of nearly 430,000 large industrial enterprises nationwide, jumped better-than-expected 19.2 percent year on year. In the first 11 months, the growth rate was 10.3 percent.

The industrial production is key to China's manufacturing-based economy. In 2008, it accounted for 43 percent of China's total GDP of 30.1 trillion yuan and contributed 42.8 percent to China's GDP growth.

Also in November, China's imports rose 26.7 percent from a year earlier, beating market expectations and reflecting increasing domestic demand.

Last month, China's power consumption soared 27.63 percent year on year, up for the sixth consecutive month since June.

Even in hardest-hit Yuhang, recent economic data were inspiring.

"Most economic figures are quite good, with some even better than our expectations. (Yuhang's) fiscal revenue this year is expected to jump by 20 percent year on year to 10 billion yuan," said Zhu Jinkun.

He maintained that the Chinese economy was seeing a rainbow of recovery after the financial storm.

Jia Kang agreed. "We can see the rainbow, but it is not a splendid one. With more hard working, the rainbow will make us more exciting," he said.

Robert Lawrence Kuhn, an international investment banker and senior adviser at Citigroup, also agreed, but cautiously.

"We are indeed seeing a 'rainbow' of renewed economic growth after the 'wind and rain' of the global financial crisis and worldwide recession -- but we quietly hope that the 'rainbow' is not an mirage," he told Xinhua via email.

Jia Kang said China was the first among the world's major economies to achieve recovery and Chinese response to the financial crisis had won applause.

Kuhn, also a long-time China observer, described China's response as rapid, risky but successful. He is the author of The Man Who Changed China: The Life and Legacy of Jiang Zemin -- China's best-selling book in 2005.

"China's rapid response to the financial crisis ... has proven to be extremely successful," he said.

In one sense, Kuhn said, "China took higher risks, since error would have had greater impact as well."

But China had little choice since China was more dependent on economic growth than almost any other country because unemployment could lead to social stress and potential instability, he said.

"China's rapid recovery and remarkable growth has gone a long way to re-instill confidence in worldwide markets," said Kuhn.

Kevin Harris, chief economist of the U.S.-based Informa Global Markets, praised China for its role in both the 1997 Asian financial crisis and the global financial crisis this time.

"In both periods, having a large economy stand as an exception to economic decline elsewhere has probably been a bigger help that is generally recognized," Harris told Xinhua.

"In each case, China's decisions have been a benefit to economies other than China's," he added.

Kuhn also sang highly of China's leadership in pursuing economic development over the last 10 years.

Kuhn said the Chinese economy could have suffered disastrous consequences in the financial crisis "if China's leaders had listened to the prescriptions of Western economists over the past decade, who insisted that China entirely open its financial markets and allow its currency to be wholly convertible."

In addition, Kuhn also valued China's efforts to help small and medium-sized companies, the vast majority of which are privately owned, to tide over the financial crisis.

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