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China an important equation to current crisis - Justin Lin

By Cai Hong (chinadaily.com.cn)
Updated: 2009-03-05 13:41

Washington – China is an important equation to solve the economic crisis, said a senior official with the World Bank on Wednesday, ahead of the opening of the annual session of the National People's Congress, during which the deputies will chart the course to ensure the country's growth in times of global financial meltdown.

"I am confident in the Chinese Government's stimulus package to lift its economy out of the crisis," said Justin Lin, the world organization's chief economist and senior vice president, at Johns Hopkins School of Advanced International Studies.

China is in a much better situation than other countries when the bite of economic meltdown is felt throughout the world, according to Lin.

China's stimulus plan touches on new bottlenecks China has. The investment will go to railway construction, building rural areas including sewage treatment and water supply facilities, infrastructure building in urban areas and energy sector.

The crisis is not the first time for China. During the Asian financial crisis in 1997, China, for the first time, adopted a stimulus package. The country invested heavily in building a highway network, one of the country's bottlenecks.

As a result, China's highways had increased by more than five times from 1980 to 2002.

"China is in a lucky position as China has accumulated a large pool of foreign reserves and the Chinese government has a lot of savings." Lin said. "So China has a fiscal space."

China's economy had kept growing continuously at an average rate of 9.8 percent in the past 30 years. The robust growth lasted longer than that of the former four small dragons in Asia, namely South Korea, Japan, Singapore and Taiwan. They enjoyed a fast economic progress at 9 percent for two decade.

The World Bank official recommended that China open more local small banks, with good supervision, to offer more people, farmers in particular, financial services.

Moreover, some sectors such as telecommunication and banking, which the policy of monopoly favors, should be placed at a competitive playground.

The government needs to support small and medium-sized township enterprises so as to create more jobs, Lin said.

He is optimistic about the scenario that China will maintain its economic growth at a 7 to 8 percent rate again. Though lower than the growth speed China's economy had moved in the previous years, the figure is higher than that in many countries.

In Chinese language, crisis, or weiji, means literally challenges and opportunities.

China should take the opportunities to make its stimulus package effective and make a successful transition from a planned economy to a market one, Lin said.

He claimed that basically the economic relations between China and the United States are complimentary or a win-win deal. "We have no time to point fingers at each other, but work together on the solutions."

"China should be taken as a partner when the world deals with the economic crisis," Lin said.

The official warned that people are seeing only the tip of the iceberg and have paid little attention to the root of the economic crisis.

An editorial of the People's Daily has called on China's top political advisory body to made due contributions to help the country weather through difficulties.
 
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