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Commerce ministry allays growth fears

By Fang Yunyu (Global Times)

08:05, June 27, 2012

The Ministry of Commerce yesterday refuted claims that the State-owned enterprises (SOEs) will go through a bitter winter in the next three years and predicted confidently that the country will meet its foreign trade growth target.

"Based on what we know from trade and business sectors, China's economic condition is not that bad," said Shen Danyang, spokesman of the ministry, at a press conference yesterday, noting that no matter how worse the global economy gets, the government can handle it "calmly."

However, Shen also said that it is difficult to predict China's future economic situation if some countries turn to trade protectionism and try to politicize economic issues, which will worsen the global economy.

Shen's remarks came after some media reported that the State-owned Assets Supervision and Administration Commission (SASAC) recently told the country's SOEs to prepare for a three- to five-year long economic "winter," referring to a downturn.

According to statistics from the Ministry of Finance, combined profits of the SOEs reached 669 billion yuan ($105 billion) in the first four months of this year, a 8.6 percent decline compared with a year earlier.

Total revenues of the SOEs witnessed an increase of 12.4 percent in first four months over the same period a year ago, while expenses surged by 14.1 percent.

"Many SOEs are engaged in energy and resources sectors, which are seriously affected by the global economic woes," Qi Jingmei, a senior economist at the State Information Center, a government think tank, told the Global Times yesterday.

Shao Ning, deputy director of the SASAC, said in a statement last week that China's economy has entered an era of contraction, and cost management will be an increasingly important factor in determining the development or even survival of a company.

Qi noted that besides the uncertain external environment, "sluggish domestic demand is also a factor presenting risks for the country's future development."

"Chinese economy is expected to undergo a difficult period, which makes further reforms urgent and necessary," said Qi, adding that the country can not rely on exports as a strong growth engine.

The government has set a 10 percent annual growth target for foreign trade this year, lower than the 22.5 percent increase registered in 2011.

Minister of Commerce Chen Deming had said earlier that China's foreign trade condition is "grim" and the country might be able to maintain a 10 percent growth this year "if we're lucky."

During the past five months, the country's foreign trade rose by 7.7 percent year-on-year to $1.5 trillion, lower than the annual target of 10 percent.

However, spokesman Shen said yesterday that exports and imports are improving, and "China can meet the 10 percent foreign trade growth target this year".

The World Bank at the end of last month cut the 2012 growth forecast for the world's second biggest economy to 8.2 percent, from January's forecast of 8.4 percent, and urged the authorities to adjust monetary policies, including easing controls over liquidity, as a way to foster growth.

However, some analysts hold a different view toward the country's economic growth and prospects of SOEs.

Wang Min, an analyst at the Guoyuan Futures Co, said yesterday that given the monopoly position of many SOEs, increasing prices of their products and services can be a solution to help them out of a financial crisis.

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