China Faces Growing Headwinds, Says Vice Premier

[Chinese-Dragon]

^Yaar tu zara apni flag change kar... no use in hiding behind a made in China burqha

Why, because Indians can't argue against Chinese without losing every time?

The member "laman12345" is actually a previous member of this forum, and he is most certainly Chinese.

You Indians attack us all the time on here, why are you so surprised that you are getting the same in return?

 

[Mujraparty]

China’s economy is changing lanes

BEIJING ( Caixin Online ) — Is China’s economy moving out of the fast lane? Growth indicators have mostly fallen below market expectations, and organizations have been quick to lower their growth forecasts.

The State Council acknowledged last week that downside risks were increasing and said the government would fine-tune policies to ensure stable growth.

It was a far more moderate response than in 2008 when the global financial crisis struck. Nonetheless, leaders are clearly worried about the economic slowdown. Many analysts share their fears, and there’s been no shortage of calls for another round of stimulus.

We’ve known for some time that China’s economy was shifting to a lower gear. But we have become so accustomed to its breakneck pace that, at the first signs of an actual slowdown, all we can see is unrelieved gloom.

It’s not wrong to worry. But rational analysis shows that though the downswing is worse than initially expected, it can be explained. Weak foreign demand since the second half of last year has led exports to drop, while the post-2008 market stimulus measures have eased. These are the main reasons for slowing growth.

In addition, leadership changes in local governments have made stability, rather than growth, the priority for now. At the same time, the government’s measures to cool speculation in property are also biting. No wonder the economy is slowing.


A slower pace of growth is no reason to panic or overreact. The 4 trillion yuan ($632 billion) USDCNY +0.3969% stimulus package launched in 2008 has left local governments saddled with debt and the economy grappling with inflation. Policy tools have little room left to work. It’s no good calling for another round of stimulus; we can’t drink poison to quench our thirst.

But because the economic fundamentals remain unchanged, existing policies can be tweaked to prevent the slowdown from becoming too drastic. For example, the government should ensure there’s sufficient credit for the real economy, promote domestic consumption, step up the launch of major projects and encourage private-sector investments.

China’s priority is its long-term development. The biggest worry is it could face a hard landing as the economy enters a phase of more measured growth.

A dip is inevitable after three decades of high growth. In healthier economies, the transition could be relatively smooth. But the market distortions in our economy make this transition especially challenging. There’s no guarantee of success.

Unlike other economies, the Chinese government has massive resources at its disposal. In a time of crisis, it can react quickly and effectively. But the measures tend to exacerbate rather than solve the long-term problems of structural imbalance and unsustainable growth.

The state-led development model is outdated and doing China more harm than good. To prevent a hard landing, China must transform itself from a low-cost economy to one that is driven by efficiency and innovation.

The slowdown is exposing problems previously hidden by years of double-digit growth. As demand from overseas falls, the government must rethink its role in the economy. It should put its massive capital and resources in the hands of market players to boost the real economy, reinvigorate small and medium-sized enterprises and inspire innovation. It must do two things: cut taxes and open the market to private enterprise.

The government has repeatedly pledged to lighten companies’ tax burdens. There’s talk that a trial in Shanghai that replaces a business tax with a value-added tax could be expanded to 10 other regions. That’s good news. But a closer look shows that some businesses in fact saw their taxes increase after the change. Unless the aim was to increase taxes on the pretext of reform, the authorities must do more to effect tax reductions.

On market access, the government recently announced that it would encourage private enterprise in a range of industries, including rail development, municipal administration, energy, telecommunications, education and medical services, in line with two major related guidelines made by the State Council during the last decade. Both of them, however, have been crippled by special interest groups.

Early this year, Premier Wen Jiabao pledged that by the end of June, ministerial-level guidelines should be promulgated. The deadline is nearing. The ministries of transport and railways have rolled out their guidelines, and other departments are expected to follow suit. But critics say these don’t go far enough. Policies from the top hold up the principle of equal access to markets and fair treatment for companies.

However, in practice, some monopolistic state-owned enterprises have lobbied decision-makers to keep out the private sector by means of a “glass door.” To ensure a truly open market and investment opportunities for all, we need clearer and more robust guidelines.

By now, we can all agree that China needs to change its growth model. In good times, the pressure for change was weak. But now, the risks of a hard landing in leaner times may provide the impetus that China needs to undertake reforms.

China could push forcefully for reform now to avert the potential hard landing, or it could turn to reform only after suffering the pain of a crash. Between the two choices, we hope it’s the former. Either way, the pain of reform cannot be avoided.

 

[Mujraparty]

China rolls out mini-stimulus to fight slump

BEIJING (AP) — China is rolling out a mini-stimulus to fight its economic slump but is moving cautiously after its massive response to the 2008 global crisis left a painful hangover of inflation and debt.

Beijing has yet to announce a total price tag. But measures announced piecemeal in recent weeks include 66 billion yuan ($10 billion) to build affordable housing and 26.5 billion yuan to subsidize sales of energy-efficient appliances.

That limited size should make the effort more manageable than the 4 trillion yuan ($586 billion) avalanche of spending and bank loans in 2008. But its power to boost growth in a $2.5 trillion economy also will be smaller.

Still, analysts say the measures should be enough to drive a rebound and keep growth for the year at or slightly above 8 percent.

"I do think it will make a big difference," said Nomura economist Zhiwei Zhang.

"Second-half GDP growth will be better than the first half, to a large extent driven by this support," Zhang said. "Without it, I think growth probably would trend down."

After spending two years enforcing lending and investment curbs to cool inflation and an overheated economy, communist leaders began gradually reversing course in December following a plunge in demand for China's exports.

Their efforts took on more urgency after economic growth plunged to a nearly three-year low of 8.1 percent in the first quarter and factory output in April grew at its lowest rate since the 2008 crisis. Analysts say growth should slow further in the current quarter.

The Cabinet publicly confirmed its strategic shift last week, promising to "give more priority to growth."

The impact should start to show up in stronger growth in August or September, according to Standard Chartered economists Stephen Green, Li Wei and Lan Shen.

The International Monetary Fund and the World Bank are forecasting 8.2 percent growth this year. Some private sector analysts lowered their own growth targets following April's weak data but to a still-robust range of 8 to 9 percent — far above the low single-digit levels of the United States, Europe and Japan. The government's official target is 7.5 percent.

The appliance subsidies might help to spur consumer purchases but measures announced so far rely heavily on more spending on building airports and other public works and encouraging private sector investment.

Construction spending pumps money into the economy quickly but raises the risk of setting back the government's longer-term effort to reduce China's heavy reliance on investment to drive growth. Easing investment curbs also threatens to add to a glut of unneeded mills and factories in steel and other industries.

The government has approved a new subway project for the eastern city of Nanjing and new airport projects in six provinces and regions, according to Chinese media. News reports say the approval process for private sector investment has speeded up.

Dozens of new wind, hydro and other renewable power projects have been approved by the country's planning agency, the National Development and Reform Commission.

Cities such as Beijing, Shanghai and Fuzhou in the southeast are speeding up construction of expressways and subway projects. Other cities have received approval to upgrade hospitals, water treatment and other public facilities.

The NDRC has approved three major new steel projects, including a 64 billion yuan ($10 billion) investment by Baosteel Group, China's biggest steel producer.

A top economic planner, Vice Premier Wang Qishan, called in March for a campaign to boost exports by 10 percent this year, according to news reports. That would be well above the zero to low single-digit growth forecast by some analysts.

The huge stimulus in response to the 2008 crisis helped China rebound quickly and pushed economic growth to almost 11 percent in 2010. But it also fueled inflation and a bout of stock market and real estate speculation.

Inflation spiked to a 37-month high of 6.5 percent last July, with food prices surging 14.8 percent, before subsiding to 3.4 percent in April, below the government's 4 percent target for the year.

Local governments that splurged on building new roads, bridges, schools and other public works were left with heavy debts to state banks that some may be unable to repay.

This year, Beijing is imposing more control, requiring central government approval for major investments and calling for projects to have long-term benefits.

"I think the government understands the undesirable side effects, and this time around they will try to stabilize growth around 8 percent," said Zhang. "I think they want to avoid overshooting."

http://www.chron.com/business/article/China-rolls-out-mini-stimulus-to-fight-slump-3594194.php

 

[Ajit Mogan]

See what you India crashing economic.....and you still crisis others....

You f**king Bangladesh done better than India?

 

[Amolthebest]

Chinese just dont expect any negative news about themselves. But its not their fault. It happens when you live in no freedom of expression system

 

[Great Sachin]

Why, because Indians can't argue against Chinese without losing every time?

The member "laman12345" is actually a previous member of this forum, and he is most certainly Chinese.

You Indians attack us all the time on here, why are you so surprised that you are getting the same in return?

No ...no...He is Chinese only...he is copy pasting same post in most of the thread.

 

[JayAtl]

http://www.defence.pk/forums/world-affairs/183982-china-does-not-have-coherent-global-strategy.html

 

[kewell333]

Chinese just dont expect any negative news about themselves. But its not their fault. It happens when you live in no freedom of expression system

So many times I said Indians just like frogs in the well. ...How ignorance you are.....
Wellcome to China if you can affort the money..

 

[śūnya_0_Zero]

LOL, when people say "Asian" in America, nobody thinks about Indians. They think about Chinese and Japanese.

Why? Because East Asian communities have been there since the beginning in America, and have contributed a lot to its rise.

Indians on the other hand contributed NOTHING to America, they only came like parasites AFTER the USA became successful.

That's why when they say Asian American, they don't mean you.

And you feel "proud" being clubbed with other small countries .. and prefer being called "Asian" rather than "Chinese". Being called "Asian" is one thing, but being proud about how "Americans" address you is really confounding.

Seriously, I don't appreciate ... what amazing you find in that.

Indians, Pakistanis and Bangladeshis are so many times believed to be just Indians .. and called so.

Chinese get clubbed with South Koreans and Japanese ... and feel "proud" about it.

If things are so bad ... I think even if Americans spit on chinese ... they will come back pleased and tell us dancing ... "see Americans chose us to spit upon".

Indeed, .. these is an inferiority complex lying within you : You seem to value "Americans" and off course that Brit "Winstron Churchill" more than anybody else in the world !!!!