Focus on Boao: When will global economy recover?

Special Report: Boao Forum For Asia
2009

Special Report:Global Financial Crisis

BEIJING, April 21 -- The Boao Forum for Asia (BFA)
Annual Conference 2009 concluded on April 19.

During the forum, attendees from China and abroad
focused much attention on China's economic trends. Although some expressed
concern as to whether or not China will be able to achieve its goal of 8 percent
GDP growth, most were confident in China's economic recovery and believed that
Asia, especially China, will have the ability to get out of the crisis.

China's
economy

China's economic stimulus package achieves
preliminary results

Recently released economic data for the first quarter
brought encouraging news to BFA attendees, showing that China's economy is
beginning to show positive signs. Li Rongrong, Chairman of the State-owned
Assets Supervision and Administration Commission of the State Council of China,
said on April 19 at BFA that, in March, operation indicators of enterprises
under the direct control of the Central Government noticeably picked up, with
profits increasing 26 percent year-on-year and 86 percent month-on-month. He
expressed that the measures adopted by the Chinese government to cope with the
financial crisis have already take effect.

Although he is holding a "cautiously optimistic" view
of the future, Li said the recovery of the economy might be beyond people's
imagination because the final outcome depends on joint efforts by the government
and enterprises.

In the current situation in which developed economies
are experiencing negative growth while the growth of emerging economies is
generally slowing down, according to Edgar Hotard, Chairman of Monitor Group
(China), the Chinese economy's 6.1 percent growth rate in the first quarter is
sufficient to shore up the confidence of China and other countries in the world.

Zhou Xiaochuan, Director of the People's Bank of
China, also believes that the positive financial policies and moderately relaxed
monetary policies implemented in November 2008 have helped prevent the Chinese
economy from sliding downward too fast.

When will the economy
recover?

Emerging economies are likely to step out of the
crisis first

Recently, some international organizations have
successively lowered their forecasts for this year's global economic situation.
The International Monetary Fund predicted that the global economy would drop by
0.5 percent to 1.5 percent, with the economies of developed countries slipping
by 3 percent to 3.5 percent. The World Trade Organization (WTO) predicted that
the global economy would drop by 1.6 percent while global trade volume would
drop by 9 percent.

However, the Chinese economy achieving 6.1 percent
growth in the first quarter has indeed struck a bright spark for the global
economy on its path to recovery.

"Many people who issued very pessimistic research
reports earlier in the year have now changed their tones," said Li Jiange,
Chairman of China International Capital Corporation Limited.

Klaus Engel, Chairman of the Executive Board of
Evonik Industries AG, said in order to cope with the financial crisis, the
Chinese government has adopted many effective measures, and everyone has reasons
to believe that Asia's emerging economies, especially China, will soon recover
to restart economic growth.

Pascal Lamy, Director-General of the WTO, said China
has been very active in financing international trade. If other countries are
willing to make the same efforts as China, they are likely to tackle the
international financial crisis through trade financing.

In the first quarter of the year, China's economy
generally performed better than expected. Just like Li Jiange and Klaus Engel,
most Chinese and foreigners who attended BFA expressed optimism that China's
economy will take the lead in escaping the crisis.

When will the global
economy and the Chinese economy bottom out?

The global economy will recover early next year or
sometime a little later next year, believes Nouriel Roubini, professor at the
Leonard N. Stern School of Business of New York University. Once the global
economy recovers, he claims, growth will happen very quickly, especially in
emerging economies like China and India.

"It is now time to listen to voices from Asia, from
China and from emerging economies," stated Long Yongtu, Secretary General of
BFA. China and other emerging Asian economies will take the lead in stepping out
of the crisis and onto a path of healthy, rapid development once again.

"Risks" and
"opportunities" coexist

China should seize new opportunities for development

The international financial crisis is still
spreading, problems existing in the financial system remain unresolved, the real
economy situation is still severe and trade protectionism is gaining momentum. A
World Bank report revealed that from last Novembers G20 summit in Washington to
this February, 17 countries from the G20 adopted a total of 47 trade
protectionism measures.

In these conditions, China's economic and social
development will face many difficulties. China's imports and exports will not
improve much as long as major economies have not recovered, expressed Zeng
Peiyan, Vice Chairman of the Board of Directors of the BFA.

"The domestic economy is in a crucial period when the
development pattern is changing and the economic structure is being adjusted,
and new challenges posed by the crisis combine with existing contradictions to
make things more difficult for China to solve problems and seek stable
development," Yao Gang, Vice Chairman of the China Securities Regulatory
Commission pointed out.

Despite heavy pressure, opportunities also exist for
China during the crisis. Looking back at the experience gained and lessons
learned from the Asian financial crisis in 1997, Li Jiange said that this
international financial crisis might be ushering in another opportunity for
development in China.

Meanwhile, attendees also
suggested that China pay more attention to the quality of economic development
and takes advantage of the crisis to promote a more balanced model for economic
growth.

Fan Gang, Director of the National Economic Research
Institute, said that whether or not China's economy can maintain eight percent
growth this year is not important. The key is whether the trend of growth is
healthy and whether it can lay the foundation for balanced development in the
future that will pave the way for further recovery next year.

"China will seize this historic opportunity to
advance strategic adjustments to the economic structure, to accelerate reform
and opening-up and to realize stable and rapid economic development that will
contribute to the world's economic recovery," said Zeng Peiyan.

(Source: People's Daily Online)