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The 'China answer' to crisis
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2010-01-30
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An article in the People's Daily on Jan 5 authored by Ren Zhongping explains why China is the first country to recover from the financial crisis and is becoming a new growth engine of the world. Excerpts:
The world economy experienced unprecedented ups and downs in 2009 because of the international financial crisis, and China's economy withstood a series of challenges. The country experienced the most severe test since the beginning of the new millennium, becoming the first to achieve economic recovery and acting as a new growth engine for the world economy to bottom out.
In the face of the challenges in 2009, China handed over an excellent answer sheet. During that time, China's contribution to global economic growth exceeded 50 percent, leading to a new global economic pattern since the end of World War II.
The truth is, China prepared early for the challenges it faced. As early as August 2007, Chinese leader Hu Jintao urged the country to strengthen monitoring and early warning on national economic security, as well as enhance its ability in responding and tackling crises and boosting the capacity of the financial industry to resist risks during globalization.
When the financial crisis wreaked havoc on the world, the Communist Party of China Central Committee made three critical judgments in November 2008. First, the important period of strategic opportunity for China's development still exists. Second, the bases and good long-term trend of China's economy have not changed. Third, the crisis had brought unprecedented challenges, as well as unprecedented opportunities.
Based on these insightful judgments, the State Council introduced 10 major measures to expand domestic demand and promote economic growth one month before the 2008 Central Economic Work Conference was held. Macroeconomic policy saw major adjustments with fiscal policy turning to "positive" from "prudent" and monetary policy from "tight" to "moderate easy". Maintaining growth, promoting people's livelihood and keeping stability became top priorities of China's economy in responding to impacts.
Since the beginning of 2008, China's GDP growth has showed a perfect "V" shape, indicating solid recovery from the slump. Now there is no doubt that China has achieved the goal of 8 percent GDP growth in 2009.
The Chinese economic recovery in 2009 has been both swift in speed and good in quality. While seeking to stabilize exports, China has made great efforts to boost domestic demand.
Even if China has summoned all hands on deck to boost economic growth, it still makes a lot of effort to improve the living standards of the people. The harder the economic circumstance, the more important the livelihood of the people.
China did not simply imitate the Keynesian model, nor has it merely sprinkled various sectors with stimulus investment. What it has done is focus on the areas where investments can ameliorate people's livelihood.
Last year, more than 11 million new jobs were created in China's cities and towns, basic health insurance scheme for urban residents was implemented, and cooperative health insurance in the rural areas was steadily pushed forward.
China has behaved as a responsible power in this crisis. As a nation with 1.3 billion people, China's economic recovery has been a great contribution itself to the world. China has duly undertaken its international responsibility and obligation, taken part actively in international cooperation to fight the crisis, promoted the reform of the international financial system, coordinated its macroeconomic policies with other economies, and driven the economic recovery of the world together with the international community.
Many commentators outside China have praised the country's capability in dealing with the crisis. Andrew Spencer, a Nobel laureate in economics, concluded that China adopted the most impressive measures in the quickest time. China chose the most opportune time to implement its measures.
American economist Stephen Roach said that China's system has been more effective than other market systems in economic hardship. An economist at the UN hailed China's stimulus package as a strategic turning point in global efforts to fight the crisis.
The institutional defect of capitalism is fully exposed as neo-liberalism came to a dead end amid the financial crisis. However, China, when pushed to the crossroads, has demonstrated its national capability to meet challenges in the crisis with a superior system of socialism with Chinese characteristics.
The advantage of this system makes it possible for us to make collective efforts to accomplish great and difficult tasks. Central policies can be carried out throughout the country, from the north to the south, from the coast to the hinterland, and from cities to the countryside. Fiscal, financial and tax leverage have been fully used by the central and local governments to mobilize people from all walks of life.
The financial crisis forced China to strive for scientific breakthroughs and industrial upgrading, bringing historic opportunities for the country to grow into a nation of innovation. The Outlook of Scientific Development promoted by the Party is forming a foundation for China to achieve more in the new round of development.
When the international media talks about "China building Noah's Ark to save the world economy", when foreign government leaders say international talks can make no progress without China's presence, we can see that the financial crisis has reshaped the world's economic map.
China, with the rise of its economic power, comprehensive capability and international influence, is playing a pivotal role on the international stage. The voice of China is heard in the world, and the world feels the national strength of a socialist country.
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