Special Report: Global Financial Crisis

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China’s business climate index, a main gauge of macro-economic outlook, continued to fall in the first quarter, but the decline was much smaller than that for the previous quarter, the National Bureau of Statistics (NBS) said on Thursday.

The quarterly business climate index slipped from 107 at the end of last year to 105.6 in the first quarter this year, the NBS said. It was the third drop in a row as the deepening global financial crisis continues to hit the Chinese economy.

But the decline was much smaller than a drop of 21.6 points in the last quarter of 2008, according to the NBS.

The index ranges from zero to 200. A reading above 100 shows economic expansion, while a reading below 100 indicates contraction. The survey began in 1998.

The index for industrial sector rose from 98.5 to 99.8. The manufacturing sector was 98.4.

The index for the areas of transportation and postal service was up, but the service sectors edged down.

The entrepreneur confidence index, a gauge of the understanding, views and projections of business people, rose 6.5 points from three months ago to 101.1 in the first quarter.

The index reflects confidence in real estate, transportation, retail, information technology and software. In reflected decreased optimism in tertiary sectors including lodging and catering, according to the NBS survey.

A series of economic indicators have showed signs of recovery of the world’s third largest economy. The industrial output rose 11 percent year on year in February, ending a sharp fall in January, for which the NBS did not provide the exact data.

There was also a decline in energy generation, a key indicator of the economic health. It slipped 0.71 percent from a year ago to 286.73 billion kilowatt hours of electricity in March, according to statistics released Wednesday by China National Power Dispatching and Communication Center (CNPDCC).

The Purchasing Managers’ Index (PMI) of China’s manufacturing sector rose for the fourth straight month in March to 52.4 percent, up 3.4 percentage points from a month earlier, the China Federation of Logistics and Purchasing (CFLP) announced last week.

It was the first time the PMI rebounded above 50 percent since July 2008, when the index fell to 48.4 percent.

A reading of above 50 suggests expansion, while one below 50 indicates contraction.

“The continuous rebound of the PMI not only shows the government economic stimulus package has begun to take obvious effect, but also indicates a stabilizing and warming economy,” said NBS head Ma Jiantang.

==== Key figures for 2009 ===

? GDP to grow by 8%
? CPI to rise around 4%

? Fiscal deficit budget of 950 bln yuan

? To allocate 42 bln yuan to offset unemployment

? Urban unemployment rate under 4.6%

? Urban employment to increase by over 9 million ? 43 bln yuan to build low-rent houses ? 120 bln yuan added to boost agriculture

==== China’s CPI up 1% in Jan. 2009 ====

The global financial crisis would make it difficult for the country to achieve its economic targets for 2006-10, which were set when the world economy had a positive outlook, a senior official said Wednesday.

Zhang Ping, minister of the National Development and Reform Commission (NDRC), said the global economic downturn posed a “serious challenge” to the country, especially its efforts to realize the social and economic goals set in the 11th Five-Year (2006-10) Plan.

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“We have done a good job in 2006 and 2007 but the worsening global financial crisis poses a serious challenge to us in achieving our goals,” Zhang said.

He made the remarks while reporting to the National People’s Congress Standing Committee how the State Council would fight the financial crisis to realize “stable and relatively fast” economic growth.

In 2006-07, the economy grew at an average rate of 11.8 percent. But the economy slowed down to 9.9 percent in the first three quarters of this year, and from July to September it grew only 9 percent.

Earlier this month, Zhang had said that the country faced “worse-than-expected” risks of an economic slowdown because of the global downturn, and it was “still very hard” to say when the worst would be over.

Since global economic woes have taken a heavy toll on the country the government has lowered its annual economic growth for next year to 8 percent.

But mid-term assessment shows the government has fulfilled most of the Five-Year Plan targets, Zhang said.

The government has basically met the annual targets of employment, trade and urbanization during the mid-term assessment.

But, he said, the country had failed to realize the goals of energy saving, emission control and economic restructuring in the past two years.

The government has set a goal to reduce energy consumption per unit of gross domestic product by 20 percent from 2006 to 2010. But it could cut only 1.79 percent and 3.66 percent in 2006 and 2007.

China’s top economic policy makers will meet next week to decide how to secure growth of at least 8 percent, outpacing the World Bank’s more pessimistic forecast, government officials said Tuesday.

The annual Central Economic Work Conference, scheduled for Monday through Wednesday, will tackle ways to implement the recently adopted “expansive” fiscal policy and “moderately easy” monetary policy, officials said.

Also on Tuesday, the Chinese Academy of Social Sciences predicted that China’s economy could sustain growth of around 9 percent next year because of the concerted world effort to counter the financial crisis.

Annual growth in gross domestic product slowed to 9 percent in the third quarter and is expected to end the year at about the same level, compared with last year’s 11.9 percent.

The minimum growth rate that China needs to absorb the millions of people entering the workforce every year is widely regarded to be 8 percent.

The top priority for next year is to maintain steady economic growth, said officials attending a recent preliminary meeting for the yearly economic summit. They noted that the central government has set next year’s economic growth target at above 8 percent, the Shanghai Securities News reported yesterday, citing unnamed sources.

The meeting was attended by members of the Communist Party of China’s politburo.

“Amid the grim outlook for the world economy, sustaining growth will no doubt become the theme of this year’s Central Economic Work Conference,” said one of the officials attending the session.

The target set by the government was higher than the World Bank’s forecast of a 7.5-percent increase next year.

Other economists were more optimistic.

Zhang Liqun, a researcher at the State Council, or China’s Cabinet, said the nation’s economy may grow 10 percent next year because of “the huge potential for domestic consumption and investment.”

Zuo Xiaolei, an analyst at China Galaxy Securities Co, said the country should have no problem achieving 8-percent expansion next year.

“If we try hard enough, it could even be 9 percent,” Zuo said.

To spur growth, China last month unveiled a massive 4-trillion-yuan (US$586 billion) stimulus package and slashed loan interest rates by the most since 1997.

Li Maoyu, a Changjiang Securities Co analyst, said this year’s conference was not likely to announce additional major policies as the government has taken strong actions over the past few months.

“The conference may focus on studying the effectiveness of the existing policies and then decide what to do next,” Li said.

(Source: CRIENGLISH. com)

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Think tank: China economy to grow over 9% in 2009?

? BEIJING, Dec. 2 (Xinhua) — Chinese economy is forecast to grow by more than 9 percent next year, according to an annual blue paper released by the Chinese Academy of Social Science on Tuesday.

? Despite the huge uncertainty in 2009, China could still achieve a 9-percent growth as long as it unveils timely and suitable macro-economic control measures to boost domestic demand, said the blue paper.

World Bank cuts 2009 China growth forecast to 7.5% vs. 9.2?

? BEIJING, Nov. 25 (Xinhua) — The World Bank on Tuesday cut its 2009 forecast for China’s economic growth to 7.5 percent, from 9.2percent previously, in a report released here.

? With the financial crisis spreading globally, the impact on China is expected to intensify amid a global fund squeeze and a slowdown in export growth in 2009, the World Bank said in its China Quarterly Update.
China’s 4 trillion yuan stimulus to boost economy, domestic demand

? BEIJING, Nov. 9 (Xinhua) — China said on Sunday it will loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand.

? This is a shift long advocated by analysts of the Chinese economy and by some within the government. It comes amid indications that economic growth, exports and various industries are slowing.

BEIJING, Dec.?2 — China’s top think tank, the Chinese Academy of Social Sciences(CASS), says that the countr’s economy is expected to slow down to 9.8% in 2008 and further decline to 9.3% in 2009.

In its annual Blue Paper on China’s economy, which was released on Tuesday, CASS noted the Chinese economic downturn is mostly attributed to the global financial crisis.

The Blue Paper also notes that housing prices will fall dramatically in a short period of time, and subsequently enter a rather long adjustment period in 2009.

Economists from CASS believe the real estate industry will be bogged down throughout 2009 as demand weakens under high prices and the global financial crisis. Homebuyers and investors will be more prudent in their activities. Suppliers will also experience a chilly season next year as some small and medium-sized enterprises with limited capital are forced to leave the market.

Risks will increase as some homebuyers become unable to pay their mortgages and some builders will not be able to pay workers to complete projects.

On the country’s employment front, the Paper adds that one million college graduates will be unable to find jobs by the end of 2008, a problem that will be exacerbated when more people may lose their jobs in 2009 as more than five million new graduates begin seeking employment the same year.

The Paper says the disposable incomes of urban and rural residents will still increase in 2008 and 2009, but at slower rates.