Macro-economy in China is now facing rare, unprecedented challenges as the nation was struck by a deadly blizzard disaster in southern China early this year and the tragic Wenchuan earthquake which jolted southwestern Sichuan on May 12 brought new, uncertain factors to its economic performance. So, the situation in the nation's economic performance has been drawing particularly attention from all over the world.
Fairly good overall economic performance has been recorded, but problems remain; the speed for economic growth shall be somewhat slower but apt to be stabilize gradually, as indicated by figures released by the National Development and Reform Commission (NDRC), the People's Bank of China (PBOC), or the central bank, and the National Bureau of Statistics (NBS).
NBS has reported that China's macro-economic April index was steady in green light zone at 110.7, lower than 113.3 in March, and its was the fourth month in the green light zone after it had undergone four consecutive months of "overheating" from September to December in 2007. Does it mean to say that Chinese macro-economy is freed of any risks of being shifted from being somewhat fast to overheating?
Risks for the economic growth to shift from being somewhat fast to overheating have been eased, and the overall economic performance tends to be stable from being overheated. This a judgment made by a macro-economy analytical group of the PBOC Financial Research Institute.
Meanwhile, Zhang Liqun, a researcher in the Macro-economic Research Department under the State Council Development and Research Center, said the basic facet of macro-economy retains a relatively good shape in term of the whole situation in 2008.
Exports represent an economic growth booster in China over recent years. The growth rate of Chinese exports has slowed down since the start of 2008 owing to a reduced demand from overseas and the rising costs of the manufacturing sector at home. Exports to the United States and the European Union (EU) decreased by 12.4 and 7.5 percent respectively in first four months from a year earlier. It is, however, still in a normal zone despite a drop in exports growth rate and a marked decline in trade surplus, said Zhang Xiaojing, director of the Macro-economy Institute affiliated to the Chinese Academy of Social Sciences (CASS).
In spite of a somewhat drop in the demand for fixed assets investment in the near future, it will retain a steady growth in view of its future trend, and consumption still retain a relatively fast growth, and an intrinsic vitality for economic growth will increase further, noted the Macro-economic analytical group of the PBOC Financial Research Institute.
The impact of the severe Wenchuan quake, which brought grave consequences to the economy of quake areas, will not alter the basic operation tendency of China's macro-economy nevertheless. This is the unanimity of views shared by economists and experts.
In contrast to the snowstorms that hit southern as the year of 008 began, the quake has inflicted less damage, as the quake-hit area is much smaller in scale and there are not many large enterprises affected in the quake area and still less ensuing impact on big profit earners in the power industry, said Feng Fei of the State Council Development and Research Center.
The China National Petroleum and National Gas Corporation said in a recent announcement that the Wenchuan quake would not bring a major negative impact onto its production operation. Furthermore, other related notices disclosed that most of the listed firms in Sichuan province and Chongqing municipality only had a limited impact or did not have any impact at all, except a few firms with grave damages in the areas seriously ravaged by the quake.
A leading official of NSB deemed that the total economic output value of the quake-hit areas, such as GDP, investment and consumption, has a much smaller national ratio, and will not change the basic shape of the overall national economy, which will still be featured by the extended smooth and relatively-fast growth.
Feng Fei from DRC of the State Council noted that suspended transport in the quake areas, which could not resume in a short period of time, will inflict short-term fluctuations in commodities prices in local areas, but will not negatively affect the overall supply nationwide or beef up pressure on inflation.
Though prospects for China's economic performance look promising, there are still some problems that are not negligible in China's economy at present. On the impact of the quake on economy, said NDRC Vice-Minister Mu Hong, "we shall pay close attention to whether the quake would exert a longer impact on Chinese economy."
The biggest risk in macro-economic performance at present still lies in pressure from the overall price rises, according to the economy analytical group of the PBOC Financial Institution. In view of a future trend, it noted, some in-depth factors for price rises are still around, and there are still relatively greater pressure on prices rise for the whole year.
PBOC announced late last week that China would raise the reserve requirement ratio by one percentage point to 17.5 percent. Dr. David Daokui Li, a noted Chinese economist and Chair of the Department of Finance at Tsinghua University in Beijing, said this move was taken out of the fear for too rapid price rises.
The overheating investment is not obvious at present, but price rises are there for all to see, and this PBOC move is still a preventive policy, he added.
Meanwhile, there are still relatively outstanding pressure on commodities prices and on fees for the transport of coal and petroleum oil and transmission of electric power, and it is still possible for the fixed assets investment to rebound in the later phases.
NBS leading official acknowledged that China has scored a smooth and relatively fast economic development since early this year despite frequent natural calamities and complex, volatile global environment. He also voiced the conviction that China is sure to surmount difficulties arising the devastating quake by attaching sufficient importance to both quake relief and economic development and responding to challenges with calm, composed confidences, so as to score the even better and faster growth of national economy under the leadership of the Party Central Committee and the State Council.
By People's Daily Online and its co-authors are Liu Lingling and Zhong Di.
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