"China faces major uncertainties even though it rebounded strongly from the latest financial crisis aided by its huge treasure chest, World Bank President Robert Zoellick said in a speech on [Sept. 28]....Noting that China's rapid recovery was fueled by an expansion of credit, he said 'this flood is now easing, and authorities are likely to limit it further for fear of effects on asset prices, asset quality, and eventually general inflation.'... He said Chinese leaders recognized the risks of the continued dependence of China and other emerging economies on export-led growth...." [Agence France Presse/Factiva]

"The recovery in China's economy gained new impetus on [Oct. 14] with figures showing that the decline in exports and imports slowed sharply in September. The Chinese authorities said that exports had fallen 15.2 percent in September compared to the same month last year, against a 23.4 percent decline in August...." [Financial Times]

Continuous government support for private sector growth is of strategic importance to China if it is to build up an enterprise-led technological innovation system, says a World Bank report released [May 14]. "In China's existing national innovation system, state-owned enterprises and research institutes are the main performers of innovation activities; in the future, however, China's success in technological catching-up is likely to rely more on the capacity of its private sector, especially large private firms", the report concludes.

China’s real economy has been hit hard by the global crisis, but has been holding up. Although China’s growth is set to slow, it is still likely to outgrow most other countries.  However, the continued global crisis is bound to contain China’s growth in 2009 and 2010, especially via weaker exports and market-based investment. The World Bank projects GDP growth of 6.5 percent in 2009.  Nonetheless, China’s economic fundamentals are strong enough to allow policymakers to consider policies that will affect the economy well beyond 2009. There are useful synergies between China’s short and medium term policy objectives.  Financial sector reform will help.

China’s economic growth has moderated to a more sustainable pace. In line with slower global growth, activity decelerated so far in 2008. Adjusted for price rises, growth of real exports and imports has decelerated but remains robust. Sharply higher import prices are inflating import values, bringing down China’s trade surplus, even as the contribution of net trade to growth remains positive. The growth moderation in part reflects less buoyant investment, but China’s domestic economy is holding up well.

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