Optimistic official comments from China’s annual legislative meeting are highlighting the country’s differences with major Western economies caught in the worsening financial crisis.
By Andrew Batson
The Wall Street Journal
China’s economy hasn’t turned the corner into recovery — housing sales, construction and manufacturing continue to contract, and the worst is almost certainly still to come for exporters hammered by downturns in U.S. and European demand, with February trade figures next week expected to show a sharp decline.
But while financial systems sag in many countries, Chinese banks — state-run, stodgy and opaque though they may be — continue to pump money through the economy. Along with flush household savings and solid corporate balance sheets, that is sparing China from the liquidity crunch and credit collapse savaging other nations.
“The effect of this financial crisis on China is different than its effect on Western developed countries,” Zhang Ping, the head of China’s economic planning agency, said at a news conference on Friday. “For us the biggest impact has been on the real economy, while in the West there has been a major impact on the financial system.”
“It’s just one crisis, not two” for China, said Ben Simpfendorfer, an economist for Royal Bank of Scotland. Because they don’t have to restructure their financial system, he said, Chinese authorities can focus on re-accelerating economic growth with measures like the 4 trillion yuan ($585 billion) investment plan the government announced in November.
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