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Sliding Shares Unlikely Influencing Economic Development: Analysis
China's stock market has declined continuously recently, arousing nationwide attention.
But Chinese economists have pointed out that the slide of the market will not affect the national economy, instead, it will continue to maintain stable growth.
" The stock index soared to over 2,300 points earlier this year, and it has recently fallen markedly, which are normal periodical vibrations," said Chen Hui, deputy director of the Market Institute of the Development and Research Center of the State Council.
The new regulations, in force since June 13, aimed at reducing the ratio of state-owned shares, will not affect the supply and demand in the market, Chen added, and it does not have any necessary connection with the fluctuation.
Many economists hold that the slump of state-owned shares will thus distribute more profits to society, as other stockholders can earn profits when purchasing new stocks. The rise and fall of stock prices will not harm the overall social benefit, they say.
Chen said that people purchase shares in expectation of future profits, and this in turn might cause in a sense some bubbles in China's stock market. The economic stagnation in the U.S. and Japan, as well as the downturn of the international stock market will not have a long- term impact on the Chinese stock market, thanks to the government' s policy of stimulating domestic demand.
Experts hold that many factors contribute to the strong momentum of economic development -- such as the country's stable currency, the eight-percent economic growth rate last year, and the increase of export volume, commodity sales and direct foreign investment in the first half of the year.
In the past decade, the reforms carried out in the financial sector have helped most Chinese state-owned enterprises get out of the black. Moreover, the social security system will ensure the basic living standards for laid-off people, thus paving the way for the ongoing reform.
Meanwhile, the streamlining of government organizations is also improving their work efficiency. The anti-monopoly campaign, particularly the movement to promote more competition in the aviation and telecommunications industrial sectors is a powerhouse for further economic growth.
China's imminent entry into the World Trade Organization and the government's large-scale investment in the 2008 Olympic Games in Beijing will keep pushing domestic demand and economic development.
Chen Huai noted that all the facts list above combine to form an unmatched economic accelerator in Asia, and even in the world.
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