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East China coastal regions may see early recovery amid increasing domestic demand
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08:18, February 23, 2009

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Although the world financial crisis has cast a big shadow on China's prosperous eastern coastal regions, companies in these areas are very likely to see the first gleam of economic recovery in 2009, according to experts.

Entrepreneurs said their confidence stems mainly from the enlarging domestic markets and increasing demand, which are backed by the government's powerful stimulus package and a series of favorable policies.


Just two months ago, more than 60,000 businessmen in the eastern Zhejiang's Yiwu small ware town -- the world's largest small commodities market -- were tasting bitterness, as they faced declining foreign demand and fewer orders resulting from the global economic downturn.

However, the turning point came after the country's traditional Lunar New Year holiday in late January. On the first trading day after the holiday, the commodity hub witnessed 165,000 customers, representing an increase of 10 percent over the same day last year, and the businessmen there were expecting more customers.

Compared with the stagnancy of last year, the market regained its vigor as most of the trade dealers came to find business opportunities and increase their orders for commodities.

Zhejiang's neighboring Jiangsu Province saw electric consumption surge. It used 443 million kwh of electricity on the first day of February. The figure rose sharply to 680 million kwh nine days later, indicating booming industrial production.


Confidence of businessmen in Zhejiang's Haining City was also bolstered by booming economic activities and increasing demands from domestic markets. The city is famous for leather industry.

"Currently, we are not as worried as we were last year when the economic turmoil spread to every corner of the markets. I am really glad to see that my goods are still welcomed," said Zha Jialin, vice general manager of Haining Leather Town Co.

Ye Xuekang, general manager of Haining Jinda New Material Co., also expressed his optimism, saying the company is under normal operation and products orders from domestic customers saw obvious increase.

"Some of the production lines have to operate for a full 24 hours to meet the demands," Ye said.

"It was the move to shift export destinations from overseas markets to domestic ones that helped us. Although various negative factors including surging prices of crude materials and currency fluctuation have almost strangled the company, the orders from new markets greatly offset the losses in foreign markets," he said.

Economists noted that the government's efforts in adding investments, expanding vast domestic markets and increasing consumption are the biggest contributions to the country's economic recovery.

In September, the government presented a four-trillion-yuan (about 586 billion U.S. dollars) stimulus plan as part of its efforts to cope with the financial crisis.

Adding to the plan were ten industrial revival policies, which were expected to provide several pillar sectors with fund support, tax breaks and other favorable policies. Automobile, shipment and textile industries were among those that befitted.


Zhuang Jian, a senior economist with the Asia Development Bank, told Xinhua, "The country's economy will gradually recover. However, the process may vary largely from one region to another, depending on economic development degree, enterprise's anti-risk ability, and fortune capacity in different areas."

Zhang Hanya, deputy chairman of the Investment Association of China, echoed Zhuang, saying that compared with central and western areas, enterprises and local governments in eastern regions can do a better job.

Zhang described their advantage as "natural abilities" -- the coastal areas in eastern China have long been served as the battlefront or the pioneers of the country's economic reforms.

"As for the local governments in eastern areas, flexible policies, sufficient capital reserves and fiscal support are the musts to guarantee economic development," he said.

Take Shanghai, another important economic engine of China, for example. The city's new Pudong area's car sales rose 15.8 percent in January over the same period last year thanks to a quick respond to the central government's automobile revival plan.

However, experts warned against blind optimism about economic recovery, as the global economic situation is still complex and changeable.

Zheng Yumin, head of Zhejiang Industrial and Commercial Administration, warned enterprises to cope with the "second-wave" of crisis attack, noting exports were still experiencing a tough time, trade-protectionism sentiments in some countries may make the situation even worse.

"After all, we should keep alert," he said.

Source: Xinhua

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