Thanks to a series of economic stimulus policies, the macro economic figures in December 2008 show that the pace of economic recession seems to have slowed down. The next six months will tell whether these measures really work. Will we see a turn-around in the lunar year of the Ox?
Ma Jiantang, director of National Bureau of Statistics (NBS) said on the last press conference before the Chinese New Year that China’s GDP grew by 9% year on year in 2008. The Chinese economy rose 10.6%, 10.1%, 9.0%, and 6.8% in the four quarters respectively. The fourth quarter growth became the slowest of the year as the growth rate dropped gradually.
In spite of the overall miserable figures, positive factors still can be found behind the figures of December alone.
In December year-on-year M2 growth rebounded to 17.8% after six-month straight decline, 3% higher than November. M1 growth at the end of December is 2.3% higher than November, drawing the seven-month decline to an end. In December alone, financial institutions�new RMB lending reached RMB 771.8 billion, 723.3 billion more than last year. These figures indicate moderately relaxed monetary policy began to bring positive effects.
The December curve of China’s import and export went smoothly. Exports brought by the stimulus policy grew by 4.8% compared to the same time last year, while total exports still recorded a negative growth of 2.8%.
China’s domestic demand enjoys a good momentum. In 2008 total sales of consumer goods reached RMB 10.8488 trillion, growing by 21.6% over the previous year, 4.8% higher than 2007. Ma Jiantang reckons the rapid consumption growth will continue in future.
With the Chinese New Year approaching, many analysts and investors are busying predicting the trend for the Chinese economy in 2009. Many believe China will walk out of the recession after the second quarter of the year.
This idea is supported by the following factors: the RMB 4 trillion package, companies finishing de-stocking, lax credit, and the turning-around of the global economy.
However, the Chinese government still sees 2009 as the toughest year ever. Premier Wen Jiabao said on a recent meeting that 2009 would be the most difficult year for China since it entered the new millennium. China has launched quite a few policies to save the economy, including the much disputed stimulus for the steel and auto industry. Whether there will be new policies released depends on the development of economic situation, though there is not much room left.
Employment problem of a great many migrant workers and graduates will be a huge trouble for China in 2009. According to the official survey, 80% of migrant workers will go back to cities to find jobs. But will there be enough positions for them in cities? This is obviously a big issue. The Chinese government considers social stability as paramount, and this is especially the case in 2009.
In spite of a wide range of issues, we still have faith in the year of the Ox, that a powerful government that can integrate various economic forms must be able to drive all forces to promote the economic development. In the past 10 years, large-scale infrastructure construction has drag China out of the Asian financial crisis. With such a track of record, what do you doubt?