China set to weather financial storm
Wed, October 29 2008
However, the nation with more than one billion people and strong economic growth may be able to offset at least some of the effects of the global financial meltdown.
“At the moment China can only save itself and thus be a certain stabilizing factor in Asia,” said Joerg Wuttke, president of the European Chamber of Commerce in China.
“It is impossible for China to help Europe, Japan or the United States out of their troubles,” Wuttke said. China’s economy is still too small for that, despite being the world’s forth largest economy, he said.
He spoke ahead of the upcoming Asia-Europe summit (ASEM) in Beijing. At the largest gathering of its kind, China will host almost 40 European government leaders and their Asian counterparts.
While the global crisis has taken its toll on China, the country appears to be better prepared than others.
In the first quarter of 2008, China’s economy grew by 9.9 per cent compared to the previous year, and even during the third quarter growth only slipped to nine per cent, with decreasing demand for Chinese exports being the main reason for the slide.
Investment banks corrected their projected figures downwards only slightly by between 0.5 and one per cent to an expected growth of eight to nine per cent for next year.
Until the world financial crisis, the government in Beijing was more concerned about the fast pace of economic growth.
On Sunday, China’s State Council announced a new economic strategy: away from “rapid growth and inflation control” and instead towards “stable and rapid economic development.”
Under consideration are tax discounts to promote exports and for banks to facilitate credit access for small and medium-sized enterprises.
Additionally, domestic demand is to be boosted by increasing financial support to farmers.
With the unexpected drop in inflation to 4.6 per cent in September, fiscal policies could again be relaxed.
While stocks have lost some 70 per cent of their value compared to the record high a year ago, the situation by no means reflects the real economic situation, as only speculation bubbles had burst.
In comparison to other countries, China’s domestic debt is relatively low, while the Chinese have the world’s highest amount of savings.
-IANS
By Andreas Landwehr
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