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Chinese Premier Reaffirms Govt's 8% Growth Target (WSJ)
AndrewBatson   
 
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2010年 03月 05日 08:13
 
Chinese Premier Reaffirms Govt's 8%


Growth Target
 
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China's leaders, kicking off the annual legislative session Friday, face the challenge of how to explain to the nation the gradual withdrawal of an enormous stimulus program without denting public confidence.

Delivering the government work report--the Chinese equivalent of a State of the Union address--to the National People's Congress on Friday, Premier Wen Jiabao reaffirmed the government's totemic 8% target for economic expansion, which it has kept for several years amid swings in actual growth rates.

'We must not interpret the economic turnaround as a fundamental improvement in the economic situation,' he said. Mr. Wen reaffirmed his commitment to policies to support the economy, while also saying he could change course if needed.

(This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)

Discussion of the economy is likely to dominate this year's session of the congress, a largely ceremonial gathering of nearly 3,000 delegates who discuss and ratify the top leadership's policies. The 10-day meeting, the pinnacle of the annual political calendar, takes place amid growing public concern about high local housing prices and nervousness about the global economy.

Few analysts disagree that China urgently needs to cool down its credit-fueled stimulus. The scale of last year's bank lending has raised worries about the future health of the financial system, and signs of property bubbles in major cities are spreading.

Mr. Wen's speech marks his latest effort to articulate where the world's fastest-growing major economy is headed. The premier has been in the public eye unusually often in recent months, repeating his mantra that 'confidence is more important than money or gold' and affirming the government's commitment to supporting the economy. But he has also acknowledged excesses in the stimulus program and spoken of the need to find other ways to keep growth going.

'Last year, Beijing had a simple strategy and a simple message: lend as much money as necessary to keep growth at 8%. This year, the job is trickier: It has to reduce lending, but not so much that growth stalls,' said Arthur Kroeber, managing director of research firm Dragonomics in Beijing. 'It will be hard to do that without damaging business and consumer confidence.'

The initial boost from the stimulus is fading, but many economists doubt private-sector businesses are ready to take over as a growth driver.

The brightest spot in the Chinese economy--the booming property market--has become a lightning rod for public discontent. The government's moves so far have sent financial markets on a rocky ride. Shanghai's benchmark stock market index has fallen nearly 8% this year, and small moves by China to tighten liquidity have sent global markets reeling several times in recent months.

Overseas investors have become ever more pessimistic on China. In a monthly survey of fund managers by Bank of America-Merrill Lynch, the net percentage of respondents expecting stronger Chinese growth over the next 12 months--the share of those who do, minus the share of those who don't--fell to 7% in February from 51% in January.

Such big swings happen, in part, because it is so difficult for investors to track China's policy changes. The government has actually been ratcheting back the stimulus since the second half of last year.

But most of its early moves came through regulatory changes and instructions to banks that were communicated privately rather than publicly announced. It wasn't until January that the central bank used a more transparent and public tool, raising the share of deposits that commercial banks must keep on reserve.

'When policy makers think about communicating policy, they really think about its impact on the real economy, rather than thinking about its impact on financial markets,' said Wang Oing, China economist for Morgan Stanley. 'That's one of the reasons the communications strategy is not that effective.'

Andrew Batson
 
 
 
 
[ 2010-03-08, 15:32 ] 조회수 : 2922
출처 : WSJ