As the impact of the U.S. financial crisis widens, bankers and China’s government officials are now discussing its possible impact on China’s economy at the ongoing 2008 Summer Davos forum in eastern China’s Tianjin. Opinions are divided; state officials seem more optimistic, in contrast to the overall gloom among other agencies.
According to China Daily，
China’s economy was in good shape and capable of maintaining financial stability despite global chaos, Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), said on Saturday.
[…] Though feeling gloomy about the outlook of the world economy, most attendees were confident about China’s economic prospects.
“China has full confidence and capabilities to ensure sound and fast economic growth for a long period of time,” Premier Wen Jiabao said at the opening ceremony.
However, accoding to Bloomberg’s report “China Says Global Woes May Spill Over, Growth to Slow,” the situation is the opposite.
The unprecedented bailout has raised concern in China, prompting officials including bank regulator Liu Mingkang to slow the introduction of new financial products such as derivatives and futures contracts.
China’s annual economic growth may slow to between 9 percent and 9.5 percent, Liu said without specifying the period, as the U.S. financial crisis may crimp consumption, affecting global growth. China’s 2007 economy expanded 11.9 percent.
“The most essential task now for Chinese companies is to survive, instead of thinking about overseas acquisitions,” said Li Rongrong, director of the State-Owned Assets Supervision and Administration Commission, which holds the government’s stakes in companies. “The major difficulty faced by state companies is a significant decline in market demand.”
The Bank of China, in contrast, is still open to buying Wall Street’s banks according to Bloomberg’s another report.
Newsweek also features this article, “Too Large To Grow So Fast,“ predicting a final slowdown of China’s economical growth with an emphasis on the property market.
Anyone forecasting a hard landing for China‘s boom is typically met with the same skepticism that doomed the boy who cried wolf. But the lesson of the fable is that the wolf did come, the third time. Now, after two false alarms in 2004 and 2006, the slowdown is at the door. China has simply grown too big to keep expanding at the 10 percent rate it has sustained for 30 years, and is likely to slow to 8 percent at best next year and for the foreseeable future. The decisive end of the era of double-digit growth is here, with major implications for the nation and the world.
[…] Until very recently, of course, the China headlines had remained entirely bullish. The red-hot expansion had shown only marginal signs of moderation through the first half this year, and most economists blamed weak growth in Western countries, which are China’s best export customers. They had also assumed that sluggish exports could be offset by stronger domestic demand, powered by Beijing’s big spending on infrastructure projects and the rising purchasing power of the Chinese consumer. However, the latest signs are that the Chinese domestic economy is not immune to slowdown: it is starting to falter, too, and the property sector is the heart of its troubles, as in many countries.
For more about the property market, see alo CDT’s article “China’s Real Estate in Gloom.”
