Special Report: Global Financial
by Fang Ning, Zhang Duo, Liu Baosen
BEIJING, Dec. 11 (Xinhua) -- After five years of
double-digit economic growth, China on Wednesday set the tune of carrying out a
"soft landing" to begin a new growth cycle, as Chinese policy makers gathered at
the Central Economic Work Conference to tackle mounting difficulties in
sustaining growth amid global financial tsunami.
The central authorities pledged to strive for
continued economic growth next year through domestic demand expansion and
"Although the work meeting did not give a specific
growth target for next year, the leadership made clear its resolution to sustain
the growth at a relative fast rate and reiterated the macro-control policies to
secure the goal," said Zhuang Jian, senior economist with the Asian Development
He said China's economy may need two and three years
for adjustment after the fast growth cycle. He believed the economy could
achieve an 8 percent growth rate next year.
The government developed a series of financial and
tax stimulus plans since November to buffer the economic slowdown, as major
economic indicators showed the country's real economy has been battered by the
global financial turmoil.
The third-quarter economic growth rate slowed to 9
percent, the slowest pace in five years, and down from 10.6 percent in the first
quarter. The November exports post the first monthly decline since June 2001,
according to the General Administration of Customs.
Ba Shusong, deputy head of the Financial Institute
under the State Council Development Research Center, said China's economic
slowdown should not be simply attributed to the impact of the global financial
crisis. Contributing internal factors include the transformation of the
fast-growing mode driven by labor-intensive and high energy consuming
development to more scientific and rational growth.
The expert pointed out the domestic consumption,
especially the largely untapped rural market, would be a long-term driving force
of sustainable growth.
China announced on Nov. 30 its plan to expand a pilot
program to subsidize rural residents in buying household appliances. The
incentive program is offered to all rural areas in the country, where 900
million people live.
Yuan Shanchun, a farmer in Xibeiyu Village, east
China's Shandong Province, where the program was piloted, was the first to
benefit from the program when it began in April. He received 241.15 yuan of
government subsidy half month after buying a refrigerator priced at 1,878 yuan.
Within half a year, another 100 households in his
village followed his suit to buy new TVs, washing machines and refrigerators.
"Most of the farmers made their first purchases of
the luxuries, like me," said Yuan, who found the fridge can keep food more fresh
and hygienic than his backyard storage.
Experts estimated that the incentive would
effectively boost 920 billion yuan of rural consumption on home appliances in
the next four years.
"There is still a large room for the government to
mull more policies to boost consumption, such as raising the threshold for
taxable income and increasing income for lower-income earners," said Cai
Zhizhou, an economist with Peking University.
Guo Tianyong, head of the Research Center of China
Banking Industry affiliated to the China University of Finance and Economics,
said both China's producer price index (PPI) and consumer price index (CPI)
figures are at low levels, which leaves more room for interest cuts, as the
government adopted a "moderately easy" monetary policy at the work meeting.
Since October, the Chinese leadership has made a
broad push for expanding domestic demand.
The People's Bank of China announced tax exemptions
and down payment cuts in October to boost the falling real estate sector. A
month later, the central bank slashed the interest rate by 108 basis points, the
biggest amount in 11 years.
The State Council, or Cabinet, announced a monetary
policy shift with a 4 trillion yuan (586 billion dollars) government spending
package to help the economy ride out the global credit crisis.
Zhuang Jian, the ADB economist, said many of China's
macro-control policies and economic stimulus would yield effects in the second
half of next year reviving the overall economic vitality.