The World's Factory Faces a Crisis of Transition

The World's Factory Faces a Crisis of Transition
China Times editorial (Taipei, Taiwan, ROC)
A Translation
March 6, 2009

The Second Session of the Eleventh National People's Congress China convened in Beijing yesterday. Most investors expected good news. Therefore the Asia-Pacific and European stock markets rose the day before yesterday, sweeping away the gloom. This shows that mainland China's economic influence is greater than ever. Amidst the global financial turmoil, it has become the focus of global attention.

As expected, Premier Wen Jiabao's "Government Work Report" mentioned 14 attention-getting economic figures. Basically the report spoke of "increasing domestic demand, ensuring long term growth, and promoting consumption." Wen said Beijing would strive to maintain an 8% growth rate, aka "Bao Ba." On this point, the world is adopting a wait and see attitude. After all, the mainland's economic growth in the fourth quarter of last year fell to 6.8%, making this year's "Bao Ba" mission even more difficult.

But Premier Wen Jiabao's Government Work Report also shows that Beijing still has 1.95 trillion USD in foreign exchange reserves. Although this year's budget deficit reached a record high of 950 billion yuan, the decline in national power remains within tolerable limits. Add to this the 4 trillion RMB economic stimulus package announced last November and rolled out this year. Add to this the Ten Major Industries Revitalization Program announced early this year by the State Council. All these show Beijing's determination to ensure long term growth.

But history is cruel. Mainland China's 31 years of reform and liberalization have been the biggest beneficiaries of economic globalization. During the past five years mainland China's economic growth, standard of living, inflation rates, trade surpluses, foreign exchange reserves and other key economic indicators all reached historic highs. This has enabled the rise of mainland China and significantly raised its international status. But this rare good fortune may not prevail over the next five years.

Beijing's most urgent task is ensuring growth. That requires transitioning to a new and effective growth mode. The past thirty years of reform and liberalization have established a pattern of export-oriented external demand. Once the global economy weakened, and external demand shrank, the mainland's role as the "World's Factory" was immediately affected.

Since last August mainland China's export growth has fallen month by month as a result of the global financial crisis. Last November it even experienced unprecedented negative growth. Excessive dependence on exports reveals the vulnerabilities in this economic model. It shows that a "World's Factory" that lacks domestic demand cannot withstand the impact of the global financial crisis. The most urgent issue is how to establish a long term growth model led by domestic demand. This is a problem leaders in Beijing can no longer ignore. That is why last year Premier Wen Jiabao was so depressed.

Some may ask, "Won't the 4 trillion economic stimulus package mainland China announced late last year boost domestic demand and encourage consumption?" The answer that is the 4 trillion stimulus program will only meet "investment needs" and not "consumer needs." The latter require targeted programs. For the mainland, this transition in growth modes is probably the most difficult challenge it has faced since it began reform and liberalization thirty years ago.

Yesterday Premier Wen Jiabao made public the Government Work Report. In a single breath he mentioned numerous measures to stimulate demand and closely linked them to standard of living issues. He provided a clear timetable. He seemed to be telling the people the government was not merely going through the motions, and that he would be personally answerable. These measures include the full implementation of poverty programs to aid low-income people in rural areas this year, targeting 40,070,000 people; educational programs to provide long term campus housing for over 95% of the student body by the end of this year; an average 10% increase in retirement benefits for retirees this year and next; the completion of road improvements for the nation's townships and villages and eastern and central regions by the end of next year, and the construction of a road network for the western region.

Wen Jiabao also promised central government support for the construction of 5000 township hospitals over the next three years; 2000 county-level hospitals and 2400 community health service centers; housing for 7.5 million low-income urban families within three years; housing for 2.4 million families living in squatters camps in forest areas, wilderness areas, and coal mining camps; and a solution to the debts incurred by the rural "Pu Jiu," nine years of compulsory education program.

These are the most generous measures instituted by the mainland since the beginning of reform and liberalization. They attempt to resolve both domestic demand and standard of living issues. They are transitional measures intended to tide the economy over for the year. Mainland economists have already warned that short-term stimulus programs will not necessarily ensure long term growth. Structural imbalances must be resolved before one can escape from the export-dependent economic growth mode of the past. Otherwise, even an economic recovery this year will not ensure a new round of economic development.

中時電子報
中國時報 　2009.03.06
社論－大陸「世界工廠」的角色將面臨重大轉型
本報訊

大陸十一屆人大二次會議日昨在北京揭幕，由於投資人普遍預期會議有重大利多消息釋出，使得亞太和歐洲股市於前日應聲上揚，一掃連日陰霾，顯示中國大陸的經濟影響力今非昔比，在驚濤駭浪的全球金融風暴中，儼然成為全球關注的焦點。

恰如各界的預期，中國總理溫家寶在大會發表《政府工作報告》時，提出十四個令人矚目的經濟數據，大致可用「拉內需、保增長、促消費」等幾句話概括，他宣稱將力爭今年中國的經濟成長維持在八％（又稱保八），這一點各界倒是真是要拭目以待。畢竟中國去年第四季的經濟成長跌至六．八％，使得今年「保八」的任務更形艱鉅。

但溫家寶的政府工作報告中也顯示，中國尚擁有一兆九千五百億美元的外匯存底作為家底；儘管今年財政赤字創歷史新高的達九千五百億元人民幣，仍在綜合國力可承受的範圍之內；加上去年十一月公布四兆元人民幣的經濟刺激方案今年起陸續推出；以及國務院年初先後提出十大產業振興方案等等，在在說明北京當局力保增長的決心。

然而，歷史終究是殘酷的。中國的改革開放迄今卅一年，是經濟全球化最大的受益者。尤其過去五年，中國的經濟增幅、財富增長率、人民福祉、通貨膨脹、貿易順差和外匯存底等主要經濟指標，幾乎達到歷史高峰，不僅國際地位大幅提高，也促進了中國的崛起。但這種難得的際遇恐怕已不可能在未來五年再重現。

對當前大陸來說，最緊迫的任務是確保成長，而成長的背後卻是怎麼將成長模式有效轉型。過去卅多年的改革開放，把大陸形塑成一個以出口創匯為主的「外需型」經濟型態，一旦經濟衰退，外需緊縮，中國作為「世界工廠」的角色立即受到波及。

去年八月以來，受金融危機影響，大陸的出口增長逐月下滑，去年十一月甚至出現前所未見的負成長，不僅顯示過度依賴出口的經濟模式有其脆弱性，更說明一個缺乏內需動力的「世界工廠」，其實經不起全球金融危機的衝擊。而未來究竟該怎麼建構「內需主導」型的成長模式，時間相當緊迫，已經不允許北京領導人再虛應故事，溫家寶年前夕間華髮，愁苦滿面的心結，即在於此。

有人也許會問：大陸去年底公布四兆元經濟刺激方案，難道無助於拉動內需，刺激消費？沒錯，這四兆元的刺激方案僅滿足「投資需求」，並不包括「消費需要」，而後者需要針對性的作為才能達到。對大陸來說，成長模式的轉型恐怕是繼卅年前改革開放後，再度面臨的一次抉擇難關。

溫家寶日昨在宣讀政府工作報告時，一口氣談到多項「拉動內需」措施，並緊緊扣合民生議題，列出明確的「時間表」，似乎是告訴民眾政府不按表操課，可以唯他是問！這些措施包括：今年對農村低收入人口全面實施扶貧政策，扶貧對象及於四千零七萬人；教育方面確保今年底九五％以上的學生都能在永久性校舍中學習；今明兩年繼續提高企業退休人員基本養老金，每人平均每年成長一○％；交通方面則是到明年底完成全國鄉鎮和東中部地區的道路改善，以及西部地區公路網絡的建設等。

此外溫家寶也承諾今後三年內由中央財政支持建設五千所中心鄉鎮衛生院、二千所縣級醫院和二千四百所城市社區衛生服務中心；爭取用三年時間解決七百五十萬戶城市低收入住房困難家庭，以及二百四十萬戶林區、墾區、煤礦等棚戶區居民的住房問題；並爭取三年內基本解決農村「普九」（普及九年義務教育）債務問題。

可以說，上述措施可謂為大陸改革開放以來，結合內需和民生議題的最大手筆。這些措施都著眼於今年能否度過難關。大陸經濟學界已經提出警語，短期的刺激方案並不一定能確保經濟成長，而需有效解決結構性失衡問題，才能擺脫往昔依賴出口的經濟成長模式，否則今年經濟即便有些復甦，也不能保證新一輪的發展必然能見到曙光。