Recently foreign media has reversed its pessimistic reports about China’s economy. A sign that companies have taken this turn to heart is that the US computer giant Dell declared on Sept 10 that it will invest $125 billion in China over the next five years. Furthermore, The Wall Street Journal said foreign investors have started bottom fishing in China’s stock market.
The Financial Times selected Premier Li’s words in a speech delivered at the opening ceremony of the Summer Davos as the title of a story, “China is a source of growth, not risk”, further quoting the Premier as saying that “China is a real source of strength for world economic growth”.
The story said Premier Li sought to reassure investors over the health of China’s economy and the Chinese government’s capacity in tackling the economic downturn and the financial market fluctuation.
Japan’s magazine The Diplomat said the Summer Davos came at the right time for China.
South Korean Central Daily News said in a story on Sept 10 that “the Chinese economy will not head for a ‘hard landing’”, which is the most important message sent by Premier Li in his speech at the Summer Davos. This is a real shot for China’s economy, said the story.
A Bloomberg story quoted Premier Li comparing managing China’s economy to playing chess.
“There are still many tools at our disposal for innovative macro regulation,” said the Premier. “We need to take targeted measures to overcome downward economic pressure, so as to lay the foundation for sustainable and healthy growth in the future. It is like playing the Chinese chess game. We need to be careful with every move we make and also keep up the momentum for the long run.”
Western media reports of China’s economy shifted their direction most obviously since the opening of the Summer Davos on Sept 9.
Germany’s Frankfurter Allgemeine Zeitung said in a story that Premier Li said China’s economic restructuring is a painful process but the underlying trend for the economy remains positive.
An economist from the German University of Cologne told the Global Times that currently three arrows are fired at the Chinese economy: China dragging the world economy, doubts about China’s market reform and dampening China’s development prospects. The economist believed that China has to shield itself against these arrows. China has been growing at a high speech for more than 30 years, he said. Just like a running high speed train, it cannot be stopped immediately, said the economist. Therefore the extremely pessimistic comments on the Chinese economy are not trustworthy.
The Wall Street Journal said in a story on Sept 8 that China’s economic slowdown might be good news for the United States.
But is this really true? A CBS story said that there is no one more concerned about China’s economy than Iowa farmers. Last year, the state exported nearly $1 billion in products to China, including $2400 million in soybeans.
Chad Hart, a professor from Iowa State University, said if China’s growth slowed down, the agriculture product prices would drop further. This means agriculture in Iowa and the entire United States would face a difficult period.
A Financial Times story on Sept 9 tried to persuade some people to give up the idea of replacing China with India. India’s economy is only one fifth of China’s economy. The Indian GDP accounts for only 2.5% of the world’s GDP, while China accounts for nearly 13.5%. If China’s keeps a 5% growth every year, in less than 4 years, that will be equivalent to another India in terms GDP.