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 for People’s Daily 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, producing medium and low-end products.
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.
By People's Daily Online