Hard times ahead for Chinese economy

January 6th, 2009 - 12:22 pm ICT by IANS  

Beijing, Jan 6 (Xinhua) Unemployment driven by the global financial crisis could cause social unrest in China, though the economy looks set to reach its annual growth target of eight percent, a study said.Han Kang, vice-president of the National School of Administration in Beijing, warned that rising unemployment, mainly among university graduates and migrant rural workers, could lead to social unrest if it was not tackled urgently.

Han was one of 13 leading economists interviewed in a survey by “Outlook Weekly” magazine published by Xinhua, who predicted that economic growth would fall in the first half of 2009, but surge back above eight percent later in the year.

“Unemployment among university graduates and migrant workers, caused by the global economic downturn and shrinking of export industries would put pressure on the Chinese society in 2009, and may even spark social unrest,” he said.

“The four-trillion-yuan (about $586 billion) stimulus plan, intended to boost the economy and ensure the eight percent growth rate, may not create sufficient jobs as expected,” he added.

The US economic downturn would curb China’s exports growth in the medium term, said Wang Xiaoguang, director of a research institute under the National Development and Reform Commission.

Other economists in the survey included Jia Kang of the finance ministry, who said: “The economic figures for the first quarter will be a little unpleasant, however, the economic trend of 2009 is still optimistic with a predicted annual growth of around 8.5 percent.”

Zhang Liqun, researcher with the State Council Development and Research Centre, said: “The recent macro-management policies will help to tackle the falling economic growth in about six months.”

Most economists agreed the second half would be a turning point as the new monetary and fiscal polices gradually take effect.

Abundant savings, safe banking system, multi-level market demand and powerful government mobilisation were the four factors that contributed to China’s prospects, economists said.

The government was still aiming at an eight percent economic growth rate for 2009 despite challenges, Liu Mingkang, chairman of China Banking Regulatory Commission, said at a financial conference last month.

China’s economic growth slowed to 9.9 percent in the first three quarters of 2008 after five years of double-digit gains. The annual economic growth of 2008 is estimated at around nine percent by the economists.

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