Best China can do in crisis is to "run its own affairs well"

Best China can do in crisis is to "run its own affairs well"
2008-10-24 20:04:49

BEIJING, Oct. 24 (Xinhua) -- With industrialized countries mired in the current financial woes, many are hanging on emerging economies such as China in the hope of bolstering the teetering world economy.

Undoubtedly, China's steady growth can play a role in fighting the crisis and the recovery of the global economy for the following reasons.

China has been on a track of robust growth for years to become the world's fourth largest economy, and the momentum is expected to continue, though in an abated way.

Its financial sector is largely insulated from the credit crunch due to limited exposure as a result of a relatively closed market.

With its huge 1.9 trillion U.S. dollar foreign exchange reserves, China has strong capabilities to withstand risk and will be able to assist other crisis-plagued countries crying for cash injections.

But the domestic economy could never get away from the crisis unharmed in today's highly globalized world, though limited as for its immediate exposure.

Chinese exporters, which fueled the country's growth in past decades, had already felt the pinch of slackened external demand amid a probable global recession, as reflected in the third quarter's 9 percent growth -- its lowest increase in more than five years.

The crisis had caused difficulties and uncertainties to the Chinese economy, and prompted the country's decision makers to stimulate it with a series of moves.

It's true China's strong footing in the current crisis would prevent many trading partners from further shocks, as the country has grown into an important market for many nations.

But "Is China able to rescue the world?," as some Western media ventured to ponder.

The bold proposition more mirrored desperation for hope and support in a sweeping crisis than true faith in China's strength to lead the world out of crisis. It was already rebutted by sensible Western analysts.

The Wall Street Journal wrote on Oct. 21 "the slowdown (of the Chinese economy) highlights ... how China has yet to achieve the kind of scale needed to single-handedly drive the global economy."

The New York-based newspaper said China ranked only 100th in the world in terms of per-capita income, and actually accounted for 6 percent of the global economy at market-exchange rates, or about 10 percent after adjusting for purchasing-power parity.

"(The Chinese economy) can be something of a driver, but what happens in the other 90 percent is going to matter more," Nicholas Lardy of the Peterson Institute of International Economics made crystal clear.

Chinese leaders were also dealing with the crisis in a practical manner. They said several times the country's sound economic growth was in itself a major contribution to global financial stability and economic growth.

President Hu Jintao on Friday reiterated the stance before leaders of 45 Asian and European nations and organizations who gathered here at the opening ceremony of the Seventh Asia-Europe Meeting. "China must first and foremost run its own affairs well," he stressed.

And the country is already on the move. Interest rates were lowered twice over the past two months following the rate cuts by other major central banks and in a coordinated global effort to stem the crisis; tax rebates for certain exports were raised to help producers cope with smaller profit margins.

The government also announced an array of policies, including tax exemptions and mortgage deposit reductions, to boost the falling real estate sector, and scrapped the stamp tax on share purchase to boost the bearish stock market.

Such moves reflected the government's resolution and confidence to achieve stable economic growth. "Confidence is even more precious than gold or any currencies," Premier Wen Jiabao had emphasized repeatedly.

Thus, one thing is for sure: China is not only the victim of the current global crisis, but will also be an active participant in resolving it, as it did in withstanding the 1997 Asian financial meltdown.

But it's unrealistic either to deny the positive China factor, or hope for too much from the country to deal with the crisis.

Editor: Lin Liyu