Special Report:Global Financial Crisis
BEIJING, Nov. 14 (Chinese media) -- Swift government actions by
developing nations to avoid a meltdown of their banking sector and maintain
economic growth are essential for themselves and also helpful to the worldwide
endeavor to rein in the global financial upheaval, economists believe.
Analysts throughout the world are talking about the financial contagion and
other difficulties facing developing countries, with a few already having
entered the debt-default zone and others nearing it.
"Developing countries, many of them already hit hard by high prices for
energy and essential foodstuffs, risk very serious setbacks to their efforts to
improve the lives of their populations from any prolonged tightening of credit
or a sustained global slowdown," World Bank (WB) chief Robert Zoellick told a
recent press conference.
"The poorest and most vulnerable groups risk the most serious -- and in
some cases permanent -- damage. One hundred million people have already been
driven into poverty this year and that number will grow," he warned.
Aid and assistance in such hard times have become less available, and a
government readiness in these countries to address the challenges means the
well-being of billions of people are being taken care of, which is obviously of
no small significance.
Justin Lin, chief economist and senior vice president for Development
Economics at the WB, summed up the negative consequences of the financial
turmoil on the emerging economies --these countries would see less exports due
to reduced consumption in rich nations, apart from a decrease in investments and
aid amid global recessions.
To make it worse, the prices of oil and raw materials, major export items
for these countries, would plunge in the aftermath of the crisis, he said.
Lin, a Chinese national, who is also a professor and founding director of
the China Center for Economic Research at Peking University, cited the swift
response from the governments to avert a meltdown of the financial sector as a
consequence of loss of confidence.
Efforts should be made to maintain growth at a relatively high level
through appropriate fiscal and monetary policies, he said, adding that a
moderately easy monetary policy is necessary to provide better access to capital
for companies, especially related to technological advances or industrial
structure upgrading.
Amid the widespread economic stagnancy, active responses from some emerging
economies like China are not only kindling hopes of growth in the countries
themselves, but also promise a kind of relief for better-off nations.
Attempting to head off the downward trend in growth, the Chinese government
unveiled a 4 trillion yuan (586 billion U.S. dollars) stimulus package on Nov. 9
to boost investment in infrastructure and social welfare by the end of 2010. The
goal is to push up annual GDP growth by 2 percentage points.
The massive spending plan is expected to play a remarkable role in
sustaining growth as the investment is equivalent to one third of the nation's
total fixed asset investment last year, according to Zhang Liqun, researcher
with the Development Research Center of China's State Council.
The measure was promptly welcomed by the rest of the world and the world
stock and commodity markets were buoyed Monday by the announcement of the
stimulus plan.
An article carried by the French daily Le Figaro said Tuesday that China's
launch of the measure just before this weekend's Group of 20 summit in
Washington reflects its willingness to join the global effort to ride out the
worst financial downturn in decades.
It said the massive stimulus plan could expand China's import demand and
thus benefit the global economy.
China emphasized innovation and structural adjustment in the economy when
specifying the 10 major focus areas for the next two years, most notably
rebuilding the areas devastated in the May 12 earthquake.
It has reminded the world of the Asian financial crisis in the late 1990s,
when certain Asian nations emerged stronger after painstaking reforms and
structural adjustments to become better poised to weather financial storms.
However, it should also be noted that developing countries as a whole are
still vulnerable to such crises, and the world community should take note of
their need and do their best to protect their interests, say analysts.
In addition, some experts have stressed the need for cooperation among
developing countries to bolster their capacity to fend off the impact of the
financial turmoil.
The head of the Brazilian Trade and Investment Promotion Agency, Alessandro
Teixeira, remains optimistic about the economic future of Brazil and China in
spite of some constraints.
South-South cooperation should be strengthened, and countries like Brazil
and China, whose economies are complementary in nature, should take the lead in
expanding cooperation and striving for a win-win result, he said during a recent
tour of China.
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