China will not save the world economy

http://www.ftchinese.com/story.php?lang=en&storyid=001027135

Both too much and too little are expected of China's response to the economic crisis: too much, because the Asian giant can play only a modest role in rescuing the world economy; too little, because few believe the economy will be radically changed. The stimulus programme is helpful, for China and the world. But the real challenge is structural transformation.

 

As the World Bank's June quarterly update shows, China's response to the crisis has been a success. It forecasts economic growth at 7.2 per cent in 2009. This is a long way down from the 11.9 per cent in 2007. But it would be viewed as a triumph anywhere else. For such an open economy to cope with a fall in the rate of real export growth from 20 per cent in 2007 to 8 per cent last year and a forecast of minus 10 per cent this year is remarkable.

 

Nevertheless, the impact of China's stimulus on the rest of the world will be modest: the country generates only 7 per cent of global output, at market prices; more-over, the bank also forecasts a decline of 5 per cent in real imports this year. The net stimulus China will give to the rest of the world will only be around 0.1 per cent of global output in 2009.

 

Certainly, China needs to sustain demand. It can also afford to do so: the fiscal deficit is forecast at a mere 5 per cent of GDP in 2009 and the risk of an upsurge in inflation is quite small.

 

Yet there is a danger. It is that what is needed in the short term makes required longer-term reform more difficult. As the World Bank notes, this stimulus is dependent on “government-influenced spending”. That can only be a stop-gap. Both the opportunity created by the crisis and the time given by the stimulus must be used to shift the pattern of growth, instead.

 

The rapid past expansion of gross and net exports is not going to return. China must move, instead, towards an economy led by private rather than public demand, towards consumption rather than investment, towards labour-intensive services rather than capital-intensive industry and towards reliance on domestic rather than foreign markets.

 

These shifts demand a number of linked reforms: opening more sectors to private competition; raising interest rates paid by privileged borrowers and to hard-pressed savers; forcing state-owned enterprises to pay dividends and using the proceeds to support public services; and introducing a decent social safety net.

For China, this crisis is a golden opportunity. It must be seized.

 

对于中国对此次经济危机的应对，外界的期望值有时过高，有时却过低：说它过高，是因为这个亚洲巨人在拯救全球经济方面仅能发挥有限的作用；而说它过低，则是因为几乎没人认为中国经济将出现根本性改变。对于中国和世界而言，经济刺激计划有所帮助。但真正的挑战在于结构性转变。

       正如世界银行(World Bank)6月份最新季度数据所表明的那样，中国对于此次危机的应对是成功的。世行预测，中国经济今年将增长7.2%，远低于2007年的11.9%。但在其他任何地方，这都将被视为一种胜利。中国实际出口增速从2007年的20%，滑落至去年的8%，预计今年出口将下降10%，对于这样一个开放的经济体而言，应对这种局面相当了不起。

    不过，中国经济刺激计划对全球其它地区的影响将较为有限：以市场价格计算，中国仅创造了全球产出的7%；此外，世行还预测，中国实际进口今年将下降5%。中国对全球其它地区的刺激作用，将仅占今年全球产出的0.1%左右。

     当然，中国需要维持需求。中国也完全有能力做到这点：中国财政赤字仅占今年国内生产总值(GDP)的5%，通胀骤然上升的可能性很小。

然而，其中也存在危险。那就是短期需要采取的举措，将加大所需较长期改革的难度。正如世行所言，这种刺激取决于“受政府影响的支出”。这只能是一种权宜之计。必须利用此次危机创造的机会和刺激方案所赋予的时间，来改变经济增长模式。

     昔日总出口和净出口的快速扩张的局面不会重现。中国经济必须转向由私人需求、而非公共需求拉动的模式；必须转向消费、而非投资；必须转向劳动力密集型服务行业、而非资本密集型行业；必须转向依赖于国内市场、而非国外市场。

这些变化需要大量的相关改革：将更多行业向私人竞争开放；提高特权借款者的贷款利率和竞相追逐的储户的存款利率；迫使国有企业分红，并利用这些所得支持公共服务；建立一个完善的社保体系。

对于中国而言，此次危机是一个不容错过的绝佳机会