Chinese leaders admit serious economic crisis for first time
Beijing (AsiaNews/Agencies) - Chinese leaders intend to implement "active fiscal policies plus moderate monetary policies." This is what emerges from the central economic and labor conference of Chinese leaders, who reaffirmed their firm intention to combat the crisis, but also highlighted the lack of reliable immediate solutions.
The members of the permanent committee of the communist party, together with high-ranking politicians, military officers, and experts, met from December 8-10 in Beijing to examine an unprecedented situation: in November, exports fell by 2.2% compared to November of 2007, for the first time since June of 2001, and experts expect them to diminish even further. Imports also fell by 17.9% compared to the previous year, with a strong reduction in domestic demand and in many prices: food prices fell by 5.9% in November, pork by 9.3%, and textiles by 2%. The producer price index fell by 2.4% in November, after years of rapid growth, and now the risk of deflation is on the horizon. The danger is that, in addition to reducing products and raw materials, it will make some forms of production unprofitable, with a loss of jobs.
The leaders promised to increase incomes, expand domestic consumption, and redistribute wealth among the different regions and between urban and rural residents, partly through a policy of differentiated taxation and subsidies. The priority - according to the final document - is "maintaining a stable and relatively fast economic growth," and, with this, safeguarding employment: analysts believe that growth of 8% is sufficient to create 20 million new jobs each year.
There are no specific details, but experts believe that there will be no adjustment to the recent depreciation of the yuan (the largest decline in three years), intended to boost exports, and to attract foreign investment, which in November fell by 36.52% compared to a year before.
Expecting precise details, the market reacted negatively: the Shanghai market lost 2.2% today.
Economic expert Ha Jiming comments that for the first time, "the state leaders apparently are trying to tell the nation of a truly grim economic picture." "It appears difficult to reach these objectives within a year or two."
Tao Dong, chief economist for Credit Suisse in Hong Kong, also maintains that confronting the crisis requires "a long-run strategy" and " structural reform."