No ecstasy of recovery, but agony of wait

For most people, it's a mystery how the lunar calendar is made. Since a Gregorian Calendar year is longer, the lunar calendar adds a "jump month" every few years. For instance, the Chinese lunar calendar this year has two fifth (or May) months. But why it has to be May and instead of some other month is usually not explained properly. But an extra fifth month suggests a long and scorching summer.

The same is true of the lunar calendar of the business world's recovery, or so it seems. No more news about the fall of the mighty companies is being heard largely because of the huge stimulus packages of the major economies across the world.

The fear once associated with the global economic system's possible cave-in has given way to the agony of waiting for a real recovery. But it is like waiting for a bus in Beijing's afternoon sun. The more you wait, the longer it seems to take to arrive.

Government agencies and their economists have come up with many things to say about a turnaround. Now that the stimulus package has succeeded in starting a turnaround, other things are needed to raise the economy's growth rate and keep it sustainable. China has a lot more to do in this area. It has to identify new driving forces for its economy and to make arrangements for its more rapid growth.

Right now, if the central government talks about one thing, local governments seem to be busy with something else. But neither is working very well. The central government's renewable energy plan will no doubt generate a lot of benefit for this country, but much of that remains at the concept level. It seems it will take a long time for it to be transformed into a mature industry like that of petroleum or petrochemicals.

Take green cars, for example. Despite being paraded at the Shanghai auto show in April, none of the seemingly ready-for-the-road electrical or hybrid models can been seen in auto showrooms - with or without the consumer incentives officials have promised.

Nor have solar panels been installed across the country, as promised. A few cities have installed them, though.

Making renewable energy and environmental protection facilities into a new "strategic" industry to boost economic growth, as Vice-Premier Li Keqiang said, may turn out to be more difficult and time-consuming than people think.

Since the focus has not yet shifted totally to renewable and clean energy, the local governments are still preoccupied with how to make money as fast as possible. For coastal cities and key business towns in the central and western provinces, that is simple: sell more land use rights to property developers.

It's hard to believe that the local governments would wholeheartedly impose the central government's ban on redirecting the credit tied to the stimulus package to unrelated housing development projects, especially luxury housing.

Nor is it likely that they will take the ban on investing overseas capital in the property sector seriously as long as it can generate additional GDP growth.

The economy's overall picture will not change unless Beijing designs a systematic incentive package for renewable energy and regulates the country's urban housing market. These are the two tasks Beijing has to fulfill to help the country overcome the global economic crisis and take the road to real recovery.

But watching the way things are moving at the moment - before the needed decisions are taken - one gets an agonizing feeling indeed.

E-mail: younuo@chinadaily.com.cn

(China Daily 06/30/2009 page9)