Expert: three reasons why China's economy will be the first to recover

Special Report:Global Financial Crisis

BEIJING, Feb. 5 -- Which country will be the first to recover from the

financial crisis? This clearly is a question that has greatly attracted the

world’s attention. Zuo Xiaolei, chief economist at Galaxy Securities, recently

wrote an article explaining three reasons why she chose China.

Zuo said that three aspects support the fact that China will take the lead

in achieving economic recovery in front of the developed countries of Europe and

the Americas.

The first reason lies in China having the foundation of a strong real

economy. Restoration of the economy lies in the recovery of the "real economy"

rather than in the development of a "virtual economy." Over the past years,

China has been committed to the development of the most traditional real

economy, and has already become the "manufacturing center" of the world as well

as the "world’s workshop." Moreover, China's manufacturing sector possesses the

most fundamental portion of the international division of labor.

More importantly, after undergoing this round of economic "mutation," China

now has a deeper understanding of the vulnerability of its development model,

which is excessively dependent on external demand. It is now agreed that

boosting overall domestic demand, preventing drastic economic downturn and

promoting economic recovery and growth are essential measures to be followed.

The second reason is China’s comparatively solid financial strength in

terms of its economic aggregate. The rapid growth of the Chinese economy in

recent years has led to a steady growth in its fiscal revenue, resulting in the

continuous strengthening of China’s economic power. It has provided guaranteed

economic strength for the government's efforts to increase investments to solve

problems concerning people's livelihoods, stimulate consumption and boost

economic growth.

In addition, China has abundant private resources due to the high savings

rate of its people. China's savings rate has always maintained a high level at

over 40 percent. Huge savings make it possible for China to mobilize sufficient

private investment funding. The huge amounts of private savings may become the

largest strength and support for promoting economic recovery.

The third reason lies in China's stable financial system. A few years ago,

China carried out a round of large-scale rectifications and restructurings in

its financial system. While providing stable financial services, the country's

stable financial environment has also provided favorable and immense space for

implementing monetary policies to support economic recovery during crisis, and

has created room for great flexibility in macroeconomic control policies.

(Source: People's Daily Online)