Protectionism is no prescription for woes

China has to learn to better handle the relations between internal and foreign trade and between domestic and external demands to overcome the ongoing global economic crisis.

Traditional domestic demand includes investment and consumption, with the former having played a pivotal role in driving the growth of the country's GDP. But investment can also give rise to inflation and result in an overheated economy because of an expanded credit and ever-growing production capability. Isn't it common knowledge that large-scale investments are followed by rigid macro-control policies?

The country's current savings ratio is about 50 percent, which means it still has enough room to boost domestic consumption. But a high savings ratio does not necessarily mean higher purchasing power when it comes to the Chinese. External demand for China means overseas demand for its means of production and consumer goods, which can be realized through trade with other economies.