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Confidence and caution

(China Daily)
Updated: 2009-02-06 07:47

With early signs that the national economy may be bottoming out, Chinese policymakers can surely be more confident about the stimulus plan they adopted to counter the global financial crisis and recession.

However, high hopes that China can be the first to recover from the current crisis do not mean that caution is not needed.

Emerging uncertainties like climbing unemployment across the country are a cause for concern. And the fight against the economic downturn is clearly far from over.

A drastic slowdown of the Chinese economy in the fourth quarter last year bears full testimony to the toll the global crisis has taken on China. The 6.8-percent quarterly GDP growth has dragged China's full-year growth to 9.0 percent, snapping a five-year streak of double-digit gains.

Yet, amid gloomy forecasts about the global outlook as well as China's growth prospects, the better-than-expected monthly data for December has already given Chinese policymakers confidence to claim that the country's counter-crisis measures are taking effect.

Latest economic indicators depict an even rosy January. For instance, the official purchasing managers' index for January rose to 45.3, up from 41.2 in December and a record low of 38.8 in November.

Although the sub-50 reading indicated manufacturing was still contracting, it offered evidence that the economy was gradually bottoming out.

Besides, the government's recent decision to increase the tax rebate rate for textile and garment exports and enhance support for the machinery manufacturing industry also gives a timely shot in the arm for domestic enterprises.

It is safe to predict that as the government quickly comes up with supportive measures for a number of key industrial sectors, the stimulus package underpinned by proactive fiscal and moderately loose monetary policies will substantially speed up the economy's recovery.

The effectiveness of the country's responses to the global crisis will enable enterprises and individuals to overcome hardships ahead with greater determination. But it provides no ground for complacency among policymakers.

Internationally, the global recession can still become more severe than expected.

Domestically, the estimation that about 20 million of China's migrant workers had returned home jobless before the Chinese New Year augurs unprecedented unemployment pressure for cities to which they will return soon.

Policymakers should race against time to address these problems.

(China Daily 02/06/2009 page4)