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China targets early recovery with stimulus, consumer spending

(Xinhua)
Updated: 2009-02-03 17:15

Three advantages

Tang said China had three advantages in achieving an early recovery. First, the financial system was somewhat insulated from global turmoil; second, the economy had become more flexible after years of continuous reform and third, the government had a strong role in driving economic development.

Since the start of the global crisis, "the Chinese government was one of the fastest to introduce the most ambitious economic stimulus plan," said Tang. He added that he was confident of China's ability to "maintain eight," which is shorthand for the goal of achieving 8 percent GDP growth.

Related readings:  Roach: China economy to rebound in 2010  China's economy likely to rebound in Q2 - Merrill Lynch  China's economy grows 9% in 2008  China's economy likely to grow more than 9% in 2008

Most Chinese officials and experts believe that the country has to keep the economy growing at least 8 percent to create sufficient jobs for the country's labor force and maintain social stability.

All 32 provinces, autonomous regions and municipalities on the mainland have set annual growth targets for 2009 of at least 8 percent.

Southwest China's Guizhou and northwest China's Shanxi provinces have forecast the slowest rates, of 8 percent. Hebei, Guangdong, Beijing and Shanghai aimed for 9 percent growth, while Shaanxi and Inner Mongolia in northern China targeted the fastest growth rate at 13 percent.

These forecasts differ because they reflect different bases in 2008. For example, last year, Shaanxi and Inner Mongolia were among the fastest-growing economies with GDP rising by 15 percent and 17.5 percent year-on-year, respectively.

Remarking Guangdong

As for Guangdong, whose GDP grew 10.1 percent in 2008, the provincial government aims to spur economic growth with more reliance on fixed-asset investment as exports decline.

Xie Pengfei, a senior provincial official, said Guangdong had arranged 200 major construction projects this year, with a combined investment of 303 billion yuan, more than double that for 2008. Some of these projects were previously planned as infrastructure for the 2010 Asian Games.

Guangdong is also at the center of a national plan to upgrade the industrial structure of the Pearl River Delta. In a plan announced last month, the central government said it would develop two or three cities into service outsourcing centers by 2012.

It also planned to develop two or three large vehicle makers in the province by 2020 and develop petrochemical refining and advanced power transmission and distribution manufacturing bases.

With increased investment, Guangdong's economy was likely to grow by about 9 percent this year as long as consumption continued to increase stably and exports didn't decline, he said.

Nascent signs of revival

Since Nov 9, when the cabinet unveiled the stimulus package, and Jan 23, when the market closed for Lunar New Year, the key Shanghai stock index rose more than 14 percent. It rose another 1 percent on Feb 2, when it re-opened after the holiday, as investors reacted to a statement by Wen.

He told the Davos international financial forum over the weekend that loans of Chinese banks hit 900 billion yuan in the first 20 days of January, up 12 percent year-on-year.

Another sign of emerging recovery might be found in Shandong Province, which has the country's major minerals trading port, Rizhao. That port handles iron ore and the like. Throughput rose 2.7 percent year-on-year in January, indicating reviving demand for raw materials.

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