Since the downturn of the US economy, there have been many discussions about whether China will be affected by this credit crunch originated from the US. Now the problem is not whether or not, but how. In the 4th quarter of the last year, many factories and businesses focused on foreign trade were closed and tens of thousands of people are laid off. Annual bonus in most companies were discounted in the last year. Even for those trying to sustain development, business opportunities become rare. It is evident that the China economy are experiencing the shock of financial tsunami. So what we can do to recover?
Actually both foreign and domestic economists and experts noted early that China was developing a very abnormal economy that we can see from the big Sino-US trade surplus. But there was no powerful measures taken to improve the situation. As long as the train of the economy is running, no much attention would be paid. Now the train is slowing down and likely to stop somewhere if nothing will be done. It is a turning point for us to make a transition in the development policy. In the past almost all of the economic accomplishments in China relied on large quantities of exports. And a big foreign reserve is gradually accumulated to the extent that China and the US are in the same boat. In the meantime, the percentage of consumption in GDP have remained low for years. Now we can't depend only on exports anymore. We should shift our focus to domestic demands.
The government has passed a stimulus package plan and some of these money has been invested in infrastructure projects. And countryside is considered the most important area for financial support. Most importantly, an overall social security plan is carrying out to cover all of the people. As long as these measures, long term or short term, are carried out fully, the potential of domestic demands can be unleashed and our economy can become into a more healthy one.
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