Govt doses needed to best revive economy

NPC, CPPCC Annual Sessions 2009

BEIJING, March 13 -- The consumer price index (CPI) and the producer price index (PPI) both fell in February, raising concern all round that the economy could enter into a worrisome deflation.

The National Bureau of Statistics has said that the

1.6 percent year-on-year drop in the CPI in February was the first in six years.

For the record, the PPI dropped 4.5 percent year-on-year last month.

But the drops in the CPI and PPI should not shroud

our optimistic look about the economy because it is already showing obvious

signs of recovery owing to the government's proactive fiscal and moderately

loose monetary policies and its plans to revive 10 major industries. Besides,

the continuous growth in banking loans and encouraging major indices emerging

from the manufacturing sector, which has suffered a setback, indicate market

fluidity is good in the country. This is important because the global financial

crisis has created a fluidity panic in a lot of countries.

Plus, the government's large-scale industrial revival

campaign and its concerted efforts to improve people's livelihood will help the

country pull out of an economic slowdown.

That does not mean we should be overly optimistic

about economic development either. The shrinking markets and falling demand in

the U.S. and European countries could thwart China's efforts to maintain a

steady growth of its export-fed economy. If the domestic market deteriorates

because of the deepening global crisis, it could sap the confidence of some

people, adding to their fears over deflation and prompting them to save rather

than spend more. Moreover, dwindling domestic demand would certainly throw

China's economic recovery plan into jeopardy.

While great efforts are being made to check the

economic downturn, we should pay special attention to ease people's fears over

deflation. To achieve that, we have to send positive and timely signals to

consumers, making it clear that the economy is on the way to recovery.

Simultaneously, the government should intervene in the market and create a

pricing mechanism to revive it and then help the economy regain its badly needed

vitality.

The fluidity panic is spreading across the world as

the global financial crisis unfolds. This has made enterprises, financial bodies

and individuals in the US and European countries reluctant to pump more funds

into the market. Worse, some countries have even taken steps to squeeze the

already meager market fluidity. The result: some emerging markets are moving

toward greater financial chaos.

This makes it all the more important for the Chinese

government to pump in as much funds as possible into its fluidity hungry market

to help it perform its normal functions and stimulate investment and

consumption. The funds would also help the market gradually resume its normal

pricing mechanism, which has been hurt by the global financial crisis.

Such steps would ensure that more than only the

financial tools work. Announcements like the 850-billion-yuan ($124.27 billion)

financial deficit this year and the government's remitting efforts to improve

enterprises' financing systems and to build an all-inclusive healthcare system

and State-funded housing will also play a positive role in boosting the economy.

There is no doubt that the strong doses prescribed by

the government and its huge financial input plan could increase the risk of

inflation in the future. But if concerted efforts are made to clear the

obstacles on the road to raising domestic demand and lowering the operational

cost of the country's social security system, the problem of surplus production

plaguing the economy could be solved. A decreasing deflationary pressure will

help the country accelerate the pace of much-needed indigenous innovation in

order to raise its industrial value-added capability.

We should not slow our efforts to rescue the market

because of the fear over giving rise to possible inflation. We expect the

government to allocate its huge budget funds to the most appropriate areas and

digest the pressure of a massive production surplus caused by the shrinking US

and European markets. Timely and workable steps taken by China will certainly

bring down the costs for the country to keep inflation to the lowest level. And

as things stand now, it seems China is likely to pull out of the economic slump

earlier than other economies.

The author is professor of economics in Fudan

University in Shanghai.

(Source: China Daily/By Sun Lijian)

Preschooling also key to nation's future

By Li Xing

BEIJING, March 12 -- Now more than ever, Chinese families are pre-occupied with education. As I listen to my young colleagues talking during lunch hour, the problems seem endless.

Those with children in primary school complain how much homework their kids have, and how many extra-curricular courses they must take in order to get into a good middle school.

Parents of middle school students worry whether their children will do well enough to get into a good high school and a first-rate university.

But parents of toddlers must worry not only about finding a good kindergarten, but also how to pay for it. Including what the kindergartens call "donations", which are in fact a surcharge, the tuition can be thousands of yuan a month.

Wang Yufeng, a member of the 11th National Committee of the Chinese People's Political Consultative Conference and a professor at Beijing Jiaotong University, calculated the cost of sending a child to a kindergarten affiliated with a leading university in Beijing.

She was stunned. Including "donations", it came to some 40,000 yuan ($5,840) a year, almost equal to the yearly tuition of four college students.

Worse, some kindergartens continue to rack their brains for new ways to extract money from parents. According to a Xi'an newspaper, one rural kindergarten charges parents 50 jiao (7 cents) for each Chinese character their child learns during the day.

The headmaster argued that the kindergarten has the right to ask for the surcharge because teaching Chinese characters to preschoolers is "special education" as defined in the national policies for preschool education.

But parents have good reasons to object. Some parents also teach their children to read, so why should kindergarten teachers take the credit and get paid for it? Will the kindergarten return the money if the toddlers forget the characters?

Whatever other problems preschool education in China may have, it should not be placing a significant economic burden on young couples, who in many cases are trying to hold down two jobs, raise a family, and help out their own parents.

It is no wonder that some 60 percent of children between the ages of 3 and 6 do not get any formal pre-school education. Blue collar workers cannot afford to send their children to kindergarten; even white collar workers find it difficult.

Education authorities should take responsibility for the state of pre-school education. They must develop effective programs to support the growth of pre-school education, and get a handle on the costs.

Until they do, kindergartens will remain more or less free to take the advantage of parents' willingness to pay for a good education for their children.

Early education is crucial to a child's development. Many young parents have opted to have only one child; understandably, they want the best for their child. A good kindergarten seems to give their child a good education and a good start in life.

But pre-school education is not just the parents' responsibility; it is important to the nation's future. As parents are always being told, don't let our kids get left behind at the starting line.

(Source: China Daily)

Interview: Lawyer expects more mutual understanding, cooperation between Brazil, China

by Chinese media writers Chen Weihua, Zhao Yan

BRASILIA, March 10 (Chinese media) -- Mutual understanding and cooperation between Brazil and China should be enhanced so as to facilitate bilateral trade, said Durval de Noronha, founder of Noronha Advogados, a well-known Brazilian law firm.

The firm, the seventh largest in Brazil with branches in Shanghai, Miami, London, Buenos Aires and Lisbon, as well as major cities in Brazil, enjoys a good reputation in China.

　　ENHANCING COOPERATION

Though Brazil and China are far from each other in geographical terms, trade between the two biggest developing countries in the irrespective hemispheres has been expanding, Noronha said in an interview with Chinese media. He was referring to reports that China had now replaced Argentina to become Brazil's second largest trading partner, after the United States.

But this achievement had also encountered some obstacles. "China is the biggest victim of Brazil's protectionism," Noronha, who is also an arbitrator with the World Trade Organization (WTO),said.

He said "two thirds of the cases we deal with in China are related to trade protectionism, and I do not think this is fair for the Chinese companies."

Noronha said some Brazilian companies have requested the government launch an anti-dumping investigation on shoes made in China, since, in practice, Brazil does not recognize China as a market economy.

The priority is that the Chinese legal system needs to be understood and accepted by Brazil, and "in this respect, China needs to push Brazil to recognize it as a market economy," Noronha said.

Both countries have been affected by the global financial crisis, Noronha said, "but it may turn out to be a huge opportunity for the two countries to move toward wider cooperation."

"We both have huge domestic markets. Brazil has rich natural resources, while Chinese companies will have opportunities to explore these resources and do business in relation to infrastructure," the lawyer said, adding that Chinese enterprises could also promote their products in the Brazilian market.

FARSIGHTEDNESS IN CHINA

Noronha Advogados, the first Brazilian law firm to set up a representative office in China, began business in Shanghai in 2002and started dealing with legal cases concerning trade issues between the two countries.

But the decision was incomprehensible to many at that time, Noronha told Chinese media.

"After China joined the WTO in 2001, I wrote a book -- China after WTO: Laws and Trade, which deals closely with the changes to the 9000 clauses of economic laws by the Chinese government," he said.

Entry into the WTO prompted China's legal structure to become more modernized; and the Asian country is no longer discriminated against in the international trading system. There might be business opportunities for Brazilian companies in China, so we took the chance, Noronha said.

"Now everyone recognizes our vision," he said.

The firm's business in China has increased rapidly in recent years. Apart from recruiting a number of Chinese lawyers, Noronha Advogados also plans to establish a second representative office in Beijing to further expand its Chinese market.

CULTURAL EXCHANGE VITAL

Cultural exchange is the best way to enhance mutual understanding, and is of vital importance to improving economic and trade relations between China and Brazil, Noronha, an enthusiast of Chinese culture, said.

He told Chinese media he enjoys collecting Chinese antiques and is also fond of Chinese music, "its slow rhythms helps me to relax."

Noronha said he hopes that more and more people will share his interest in Chinese culture.

Last year, the Confucius Institute at Sao Paulo State University, first of its kind in Brazil, was established with the help of Noronha, who now plans to set up more in other Brazilian cities in order to popularize Chinese culture.

"The challenge we are facing is that entrepreneurs from the two countries do not know each other well. Therefore, we need to communicate by means of language and culture. Only by doing so will our relationship make good progress in the future," he said.

UN-U.S. relations head to improvement

by William M. Reilly

UNITED NATIONS, March 13 (Chinese media) -- UN Secretary-General Ban Ki-moon's visit to Washington earlier this week promised to be a bellwether on improving relations between the United Nations and the United States under the new leadership of U.S. President Barack Obama, at least until midweek.

Then there was a bump on Wednesday on the road through Capitol Hill.

But, at week's end it looks like smoother running ahead.

At least one member of U.S. Congress emerged from a meeting with Ban saying the secretary-general had referred to the United States as a "deadbeat" because Washington owes nearly 1 billion U.S. dollars in assessments and contributions. It was taken as an insult.

Ban later admitted to reporters he had made the remark but made no apologies.

However, it concerned the secretary-general so much his spokesperson issued a late night clarifying statement and Ban took time out on Thursday during a news conference at the UN Headquarters in New York, after listing positive aspects of the Washington visit, to comment on what he described as "a misunderstanding that has made news yesterday."

"Speaking with a group of members of the House of Representatives, I noted how generous the United States has been in supporting the United Nations, both in terms of assessed and voluntary contributions," Ban told reporters. "At the same time, Inoted that the United States is also the largest debtor, owing more than 1 billion dollars in arrears, soon to reach 1.6 billion dollars."

"My point was simply that the United Nations needs the fullest support of its members, and never more so than in these very demanding times," Ban said.

The 1.6-billion-dollar arrear is what is expected to be the U.S. debt at the end of its fiscal year on Sept. 30.

"This hiccup aside, the future is bright," one U.S. official at the United Nations told Chinese media later Thursday. "Some things will be difficult. It doesn't mean we will always get along."

He referred this reporter to the statement read by U.S. Ambassador Susan Rice at her confirmation hearing.

"The Obama Administration will work to maximize common interests and build international support to share the burdens of collective action to counter the most pressing threats Americans face, while working to help tackle the poverty, oppression, hunger, disease fear and war that threaten billions around the world everyday," she told members of the U.S. Senate Committee on Foreign Relations on Jan. 15.

"We will make our case to the United Nations, and press for it to become a more effective vehicle of collective action," she said." We will also be prepared to listen and to learn, to seek to understand and respect different perspectives. The task of our diplomacy must be to expand both the will and ability of the international community to respond effectively to the great challenges of our time."

The embracing of multilateralism in diplomacy markedly contrasted with the unilateral stance of the administration of U.S. President George W. Bush.

Ban started off his two-day visit to Washington on Wednesday fresh from a quick trip to impoverished Haiti the day before.

His first stop was the White House. The significance of the secretary-general being only the third international leader to call on the new president was underscored by UN officials.

"I think the United Nations can be an extraordinarily constructive, important partner in bringing about peace and stability and security to people around the world," Obama told reporters during an encounter with Ban and reporters. "The secretary-general has shown extraordinary leadership during his tenure."

Obama said the pair held wide-ranging talks.

"There are a host of international issues that we both agreed have to be addressed," the president said.

"Ban has spoken extensively about the issue of climate change, and as all of you know, this is something that my administration is deeply concerned about, as well," Obama said. "We welcome his leadership. We're looking forward to working with some of the major countries involved to figure out how, even in the midst of economic crisis, we can move forward and prevent what could be longer-term ecological crises that could have a tremendously adverse effect on the international economy if we don't take action."

It certainly is different from what was heard from the previous White House.

"The United Nations and the United States share common visions and objectives for peace, stability, development and human rights," Ban told reporters.

He dubbed 2009 a "make-or-break" year, saying collaboration with Washington was essential to address various crises to turn the year into a "make-it-work" one, "full of optimism and resolution."

Ban and Obama jointly called for strengthening efforts to achieve the Millennium Development Goals, a set of eight ambitious anti-poverty targets with a 2015 deadline agreed on in 2000.

"On climate change, we agree," Ban told reporters on Thursday. "It is an existential threat. We know what we must do."

"President Obama and I share a fundamental commitment: 2009 must be the year of climate change," Ban said. "That means reaching a comprehensive agreement in Copenhagen by year's end.

Ban said climate change also "dominated my discussions" with U.S. congressional leaders.

"With U.S. leadership, in partnership with the United Nations, we can and will reach a climate change deal that all nations can embrace," he said.

The secretary-general, at his meeting with reporters on Thursday, added to the list of topics discussed with Obama poverty reduction, Afghanistan, Haiti, the Middle East and Africa, namely Somalia and the consequences of Sudan's expulsion of more than a dozen humanitarian aid agencies following the International Criminal Court's arrest warrant last week for Sudanese President Omar al-Bashir.

One western diplomat, representing a member of the UN Security Council, said fellow diplomats are encouraged by the news from Washington. "It is definitely an encouraging signal," he said. "Overall feelings in the United Nations are change has arrived in a package, but we have to see about the contents."

Economist: financial crisis brewed by U.S. market fundamentalism

Special Report:Global Financial Crisis

SOFIA, March 11 (Chinese media) -- The wide spreading

financial crisis has the hallmark of being "made in U.S.A." with its origin and

the disaster center all in the United States, said a leading Bulgarian economist

in a recent interview with Chinese media.

Ivan Angelov, member of the Bulgarian Academy of

Sciences, strongly criticized what he called "U.S. market fundamentalism," which

he believes triggered the global crisis.

He expressed his strong belief in government

intervention which should be made in time, rather than lagging behind until the

disaster grows bigger.

A market-oriented economy should be within the

control of the government, the free-market economy preached by the

fundamentalists will not work, he said.

The Bulgarian economist blasted the U.S. bailout

plan, saying salvaging the banks is actually footing the bills of the rich by

using the money of the struggling tax-payers.

He said it is a big irony that the Wall Street top

executives, who used to enjoy bonuses of tens of millions of dollars, could

still get a half-million-U.S. dollar compensation, higher than the annual salary

of the U.S. president.

He noted that the financial crisis spread quickly

from the United States to Western Europe within half six months and was

transmitted to Eastern Europe several months later.

This year will be difficult because massive loans,

estimated at400 billion dollars, granted by Western European banks to East

European countries, will be due, Angelov said.

These loans will prove to be too much a burden for

East European countries that are already deep in economic troubles, he said.

The countries deep in debt are those who depend

heavily on a currency board, the practice of a small country to peg its currency

to a strong, stable one, just like what Estonia, Latvia and Bulgaria are doing.

By September 2008, Estonia's foreign debt accounts

for 131 percent of its GDP, Latvia 116 percent, Bulgaria 109 percent.

Another symptom of Eastern Europe's financial crisis

is its high current account deficits, Angelov said.

The current account deficits of Bulgaria, Estonia,

Latvia and Lithuania -- whose currencies are all pegged against the euro -- are

at 15-24 percent of GDP, levels that have historically been associated with

currency crises.

The worsening financial instability that is troubling

the entire Eastern Europe will trigger massive foreign investments outflow,

analysts forecast.

In 2008, the capital flow from developed countries to

Eastern Europe reached 254 billion dollars, while this year, the volume will

expected to merely 30 billion dollars, Angelov said.

There were already cases that some Western European

banks pulled money out of their branches in East European countries, Angelov

noted.

He said the trend is alarming because West European

banks are holding as much as 90 percent of the capital of Bulgarian banks,

leaving the Bulgarian government little leverage to save the country's real

economy.

Even the banks have enough money, they are cautious

about providing loans to Bulgarian enterprises given the unpredictable financial

situation, Angelov said.

Still, he said he was against selling most of

Bulgaria's banks to foreign investors.

Angelov underlined the necessity to restore

confidence in Bulgaria's financial sector and encourage banks to keep money in

Bulgaria and provide loans.

He said the financial crisis has left enormous

impacts on Bulgaria, citing a fall of 10 percent in the country's industrial

production index in December, a 31-percent drop in mining industry, and a 60

percent decline in ferrous and metal production.

"That is utterly horrendous for Bulgaria," he said,

adding that the country's export-dependent metallurgical industry also suffered

an annual shrink of 35 percent.

Angelov said he believed that the shockwave of the

financial crisis began to hit Bulgaria in late 2008 and the beginning of 2009,

and will reach its peak from April to June, leading to sharp falls in exports

and production, and then quickly spread to other sectors.

Angelov said foreign investment badly needed by

Bulgaria will plummet from last year's 5.4 billion euros (6.92 billion U.S.

dollars) as foreign capital is fleeing Eastern Europe amid fear of financial

instability in the entire region.

He recommended the government to take timely and

effective measures to deal specifically with the crisis.

On Bulgaria's economic prospects, Angelov said the

crisis will last through 2010 and recovery is expected to come in 2011.

"Confidence is everything for the moment," he said.