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BEIJING, May 3 (Xinhua) -- Decoupling from the world, and the economic downturn much of it is experiencing, has proven impossible for China. But its resilience is receiving more recognition, with many leading financial institutions upgrading their 2009 growth forecasts since mid-April. The adjustments for gross domestic product (GDP) growth, ranging from 0.5 to 2.3 percentage points, were based on signs of a turnaround in the first quarter. These indicators included stronger-than-expected real GDP growth, recovering property investment, a pick-up in power consumption and a surge in bank lending. Merrill Lynch & Co. said it expected China's GDP to grow 7.2 percent in the second quarter and 8 percent this year, while Goldman Sachs raised its projection from 6 percent to 8.3 percent, the most optimistic forecast so far. Other forecasts include UBS, which raised its estimate by 0.5 point to 7 percent and CLSA Asia-Pacific, which lifted its outlook by 1.5 point to 7 percent. China's policymakers can take heart from these forecasts. Every upward revision, big or small, given the global economic slowdown, might point to a better chance for the nation to achieve its 8-percent growth target. That level of growth is considered necessary to raise living standards while maintaining social stability. But there's still the question of whether rapid growth is sustainable. Some analysts believe it isn't unless China can rebalance its economy and achieve higher efficiency, lower environmental costs and a more reasonable balance among investment, trade and consumption. QUANTITY OR QUALITY? In an interview with Xinhua, Stephen Roach, chairman of Morgan Stanley Asia, urged Chinese authorities to get more serious about stimulating private consumption because the global economy remains "pretty weak" and might only achieve a weak recovery. "China has responded to the crisis the way it has always responded to global problems. That is, using proactive fiscal stimulus mainly in the infrastructure area to provide temporary support in the downturn until the global economy comes back. It worked in the 1997 Asian financial crisis and the 2000-2001 mild recession. But this is a different sort of problem," said Roach. "Once the stimulus wears off and if there is no follow-through, the Chinese economy will weaken again. I don't think exports will recover in the weak global economy." Domestic economists voice similar worries, saying that the speed of growth doesn't matter as much as the quality. Liu Shangxi, deputy dean of the Research Institute for Fiscal Science at the Ministry of Finance, said that the 6.1-percent year-on-year growth in the first quarter had been "fairly good" for China. But, he said, "sometimes, it's worth slowing down a bit to have the economy move more stably." Wang Xiaoguang, an economist with the National Development and Reform Commission (NDRC), the chief planning agency. said that the government's annual growth target had become mostly symbolic. For five years in a row, the target was 8 percent, and for five years in a row, the growth rate overshot the target. Wang said the government had faced a dilemma: a cut in the target might undermine public confidence while a rise might tempt local governments to over-invest to meet a high growth target. The turnaround signs mostly reflected the impact of the 4-trillion-yuan (586 billion U.S. dollars) stimulus package. Meanwhile, retail sales still trailed investment in contributing to growth. Local economists warned that the economy remained unbalanced and vulnerable. "Historical records show that adjustments in the Chinese economy would take two to three years, on average. Seven months have passed since the impact of the global financial crisis began to tell on the local economy. "With a turnaround in sight, recovery might come earlier than expected but there are still risks of a further slowdown," Chen Dongqi, deputy chief of the Macro-Economic Research Institute under the NDRC, told a business development forum in Guangdong in late April. BUYING CURE It's widely accepted among economists that China should boost domestic private consumption by leading individuals to buy more and save less. The key question is: how? "Two big programs" Roach advocates call for doubling the investment in social security immediately to 150 billion U.S. dollars and establishing a goal of raising consumption as a share of the economy from 36 percent to 50 percent within five years. "What I think is missing here is the social safety net, social security pension and unemployment insurance. Because of the absence of the safety net, China has seen a high level of precautionary saving," he said. Roach suggested that China develop a private pension system in particular so total employee compensation could rise in tandem with productivity. "Chinese companies need to partner with their workers and provide medical care [and] retirement investing for their workforce. Chinese workers' total pay package should have both wages and benefits," he said. Liu agreed that the primary task in expanding consumption was to raise incomes. "Securing the legitimate interests of workers is particularly significant when the economy slumps. It would be like drinking poison to quench one's thirst if businesses sought to expand corporate earnings at the cost of workers' pay and benefits," he said. Low labor costs and massive capacity have propped up China's prosperity over the past decades. But the proportion of wages to national income has been on a long decline since the 1990s. Between 2002 and 2006 alone, economists estimate the figure dropped from 62.1 percent to 57.1 percent. Meanwhile, the contribution of consumption to GDP growth fell from 43.6 percent to 38.9 percent. "A more meaningful index to judge the sustainability of China's economic growth would be the proportion of wages to national income," Liu said. "If this ratio did not rise, people would remain poor, and thus expanding consumption would be empty talk." Chinese are far from wealthy. Only 4 percent of the workforce, and just 10 percent of the urban workforce, earn more than 2,000 yuan a month, the threshold for individual income tax. As Chinese residents hold 2.43 trillion yuan in aggregate deposits, economists say one immediate way to boost consumption would be to stabilize spending on staple property -- including housing and automobiles -- and support tourism and cultural activities. "People spend much of their money on housing and food. The government should encourage people to entertain themselves more," Wang said. CHINA 'NO LOCOMOTIVE' Although China might be the first major economy to recover from the downturn, economists disagree on when China will return to sustained high growth. Morgan Stanley, for example, has forecast a firm recovery by mid-year, but said sustainable growth through 2010 would still hinge on what happens in other countries. "China will be stronger. But will that strength be enough to allow others to follow in its footsteps? I don't think so," said Roach. "Most of China's resilience comes from infrastructure building, roads, property consumption ... [this] won't have an impact on the United States and Europe. This resilience is only temporary while its stimulus is local rather than global." Central bank governor Zhou Xiaochuan also warned in late April during World Bank-IMF meetings in Washington that the rebound in China's economy had to be consolidated. He said conditions in China would permit rapid economic development again, once macroeconomic policies such as the stimulus plan took effect. Challenging internal and external conditions, he said, included continuously shrinking external demand, a relatively large decline in exports, overcapacity in some industries, falling government revenue and lingering employment pressure. As China emerges from the shadow of the downturn, together with many of its Western partners, the world is closely watching the socialist market economy that it is still trying to develop. It was interesting to see that there was much "the ideologically-constrained West" could learn from China, just as there was much China could learn from the West, said Roach. "China has gone slow in many areas, especially in the opening up of its financial market. But China made the right choice," he said. "Focusing on stability is a huge plus for China. But the nation must be vigilant in its financial policies, especially monetary and regulatory policies, and not allow asset bubbles and financial innovations it doesn't understand," said Roach.
TAIPEI, June 4 (Xinhua) -- A Chinese mainland business delegation signed deals to purchase Taiwan products worth more than 2.2 billion U.S. dollars after a four-day visit to the island, it was announced Thursday. Orders involving 827 million dollars of products would be filled by July, and products worth of 1.4 billion dollars would be delivered by the end of this year, said Li Shuilin, head of the delegation. On their shopping list are LCD (liquid crystal display) equipment, spare parts for mobile phones and computers, plastic and chemical products, textiles and handcrafts, he said. The group, organized by the Mainland Association for Cross-Strait Economic and Trade Exchanges, comprised about 80 representatives of 35 companies, including IT and home appliance giants Lenovo, Haier, Changhong and ZTE. Their buying spree was seen as a symbolic step to expand trade ties between the mainland and Taiwan and to offset the effects of the global economic downturn. The mainland businesses held talks with more than 300 Taiwan firms in Taipei and Kaohsiung to learn more about their products and market potential in the mainland. They also discussed how to use their reciprocal advantages to reinforce manufacturing capacities of both the mainland and Taiwan, Li said. Also on Thursday, telecommunication industries on both sides of the Taiwan Strait agreed to tap mobile telecommunication markets, particularly the mainland's newly-launched 3G (third generation mobile telecommunication) market. A total of 17 telecommunication service providers and 30 equipment manufacturers of the mainland were invited to attend a forum in Taipei this week. Datang Telecom, a mainland telecommunication equipment vendor, signed an agreement on cooperation with Taiwan's Industrial Technology Research Institute (ITRI). They will discuss the possibility of a pilot network in Taiwan using Datang's TD-SCDMA 3G mobile telecommunications standard. "We see a lot of opportunities for cooperation as the mainland is fast developing its 3G market," said Liu Liqing, chairman of the China Association of Communications Enterprises. Johnsee Lee, president of the ITRI, also said the discussions would help local equipment producers better understand the market potential and industrial standards in the mainland.

BEIJING, June 24 (Xinhua) -- The Chinese government's fiscal revenue in the first five months of 2009 reached 2.7 trillion yuan (400 billion U.S. dollars), down 6.7 percent from the same period of last year, Finance Minister Xie Xuren said Wednesday. Xie revealed the figure in a report to the ninth session of the Standing Committee of the 11th National People's Congress (NPC), China's top legislature. Of the total, the central government collected about 1.4 trillion yuan, down 14 percent. This accounted for 39.6 percent of the annual budget. Local governments collected the other 1.3 trillion yuan, up 2.9 percent, which accounted for 42.4 percent of the annual budget. Xie cited four factors for the drop in fiscal revenues: a fall in international trade due to the global economic downturn; a fall in revenue value relative to the consumer price index and producer price index; structural tax reduction polices and a slowdown in China's economic growth. Structural tax reduction policies reduced taxes by about 230 billion yuan in the first five months, according to the report. He said in the first five months, fiscal expenditure nationwide amounted to almost 2.25 trillion yuan, up 27.8 percent over the same period last year, accounting for 29.5 percent of the budgeted figure. Central government expenditure totaled 459.3 billion yuan, up 21.4 percent, while local governments spent 1.79 trillion yuan, up29.5 percent, he said. The funding went mainly to expanding public investment, increasing subsidies for low-income groups, ensuring sufficient money for education, health, social security, employment, basic housing and culture, and supporting technological innovation, energy conservation and emission reduction. Xie stressed that the government would continue to ensure the stable growth of investment and actively implement structural tax reduction policies to ease the burden on business and consumers. Doing so would encourage companies to invest and individuals to consume. "Efforts should be made to boost revenues and cut spending," he said, calling for frugality and strict control of expenditures by reducing government vehicle purchases, reception fees and official travel. He said: "The construction of government and Party committee buildings should be rigidly limited." The government would promote the scientific and meticulous management of public finances, boost efficiency and deepen fiscal system reform, he said, adding that resource tax reform would be advanced and the consumption tax system would be adjusted. Xie said the outstanding national debt reached 5.3 trillion yuan at the end of last year, which was within the 5.5-trillion-yuan limit in the annual budget. The government's fiscal revenue reached about 6.13 trillion yuan last year, 19.5 percent more than in 2007. Xie said the central fund for reconstruction from last year's May 12 earthquake reached 74 billion yuan and expenditures were 69.77 billion yuan last year. This year, the central budget allocated 130 billion yuan for reconstruction work.
L'AQUILA, July 9 (Xinhua) -- U.S. President Barack Obama said on Thursday that he was looking forward to visiting China later this year. Obama made the remarks when meeting with Chinese State Councilor Dai Bingguo, who was here to attend the leaders' meeting of the Group of Eight (G8) and five leading emerging economies (G5) on behalf of Chinese President Hu Jintao. During the meeting, Obama said the U.S. side attached importance to the U.S.-China relations, and he hoped that the upcoming U.S.-China Strategic and Economic Dialogue could generate fruitful results, according to a press release issued by the Chinese delegation. It is important for the United States and China to enhance cooperation on major international issues, Obama said, adding that it benefits both countries and both people. The two also exchanged views on bilateral relations and other major international and regional issues, said the press release. Dai conveyed Hu's greetings to Obama while Obama asked Dai to pass on his greetings and good wishes to Hu. Hu cut short his stay in Italy and skipped the G8 meeting due to the situation in China's Xinjiang Uygur Autonomous Region. He returned to Beijing Wednesday.
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