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Opinion: China's economy has landed, safely

By Li Hong (People's Daily Online)

15:04, September 07, 2011

China's economy has entered a relatively tranquil terrace, as most economists prelude no new tightening measures from the central authorities till the year end, barring any ferocious policy changes in the developed economies which remain today seriously subdued after a blockbuster crisis.

Considering the ever-elevating prices and inflationary pressure, the central bank could still move to raise the interest rates by quarter a percentage points. Another additional move to gear up banks' required reserve ratio -- now at a record high of 21.5 percent for all the heavyweight lenders -- is also on the table.

The world's second largest economy has softly landed – widely expected to expand by about 9.5 percent in 2011, the highest among the world's major economies. The great landing on a terrace owes to Beijing's invisible hand of fiscal, monetary and administrative management – nicknamed as"macro control"here -- that has ensured Asia's largest economy does not run off course.

However, it's not time to pad the shoulders and celebrate. Like running river rapids, the first moments in the quiet upstream waters offer little hint of the vortex ahead. So, the decision-makers in Beijing must always stay in their positions and keep vigilant.

Though price rises in August might not reach 6.5 percent recorded for July, thanks to a string of government tightening measures since the second half of 2010, inflation could surge again and possibly run out of control as factors totally unexpected emerge and complicate issues. Premier Wen Jiabao has time and again requested his cabinet officials put clobbering inflation as the very top of all central government work, and he is rightly so.

The developed countries' stubborn while strenuous pursuit of excess loose fiscal and monetary policies – to ride them of capital crunch and a deflationary cycle -- demands the emerging economies, including China's, take the symmetrical policy of extraordinary tightening to hedge against. Otherwise, the emerging countries are likely to be inundated by torrential money inflows from where the capital is incepted.

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Leave your comment11 comments

  1. Name

PD User at 2011-09-19221.226.37.*
why the high price of the house cannot reduce!
CK Wong at 2011-09-16124.13.183.*
Yes, China is doing well in current economic performances, but China must not let go of some of the vital industries, first and the most important is the agricultural and food production sector, and the up grading grow of the financial sector and its distribution. See what happens in most Europe countries like Greek, Italy, Spain and Portugal. They forget about their agricultural sector and home consumption structural changes to imported good and services. And the social benefits programme are too wasting of resources, which the counties could not shoulder. America ma face the same problems it US does not cut spending and borrowing, and switch resources from military spending to agriculture and manufacturing (non-military) sector through government aided programme. China is easier to implement such programme because of her centrally planned system is still readily activated by the Authorithy when problem arises. European countries erred in creating consumer spending by handing out goodies and easy personal consumer finances and neglected the ability to repayment by borrowers, and some social benefits programmes are actually doing more harm to the countries than good, especially programmes that make people just thinking of enjoying life and becoming lazy. China must be very alert in this direction.
thomas at 2011-09-08202.89.190.*
china you done well please do not let your guard down keep going your own way dont listen to the western countries they so blinded they wont know their asses are on fire even when you set their pants on fire lol
Bob at 2011-09-0824.19.2.*
This article will be a great source of humor in 5 years. I plan to keep a copy.
PD User at 2011-09-0858.68.145.*
Not really softly landed. wait and see.

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