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Predictions about the economy prove useful
http://www.ecns.cn/voices/2015/06-15/169261.shtml
Jun 15th 2015, 00:54
The reason so many forecasts of China's economic collapse have failed to prove anything close to the truth is that, while seeming to be based on at least some facts, they have helped remind decision-makers and managers of the problems they have to avoid.
They have helped create a kind of pressure, so to speak, for them to always answer to themselves (before showing the world) whether what they do will be sustainable. They have to make sure that their policies will result in at least an increasing sense of certainty, and at best a workable model, of steady growth.
For the last couple of years the decision-makers have tried hard to bring about such a long-term effect, despite many short-term difficulties.
This month, when one heard Premier Li Keqiang speak in front of representatives of some of the largest international corporations of his confidence in China's annual 7 percent growth in GDP "for a fair period of time to come", one can get some sense that the economy's ongoing slowdown is about to hit its bottom.
First of all, figures are unlikely to get much uglier in the last few months of the year, simply because the economy's performance was already sluggish in the second half of last year. Second, as Li said, China can continue generating important growth by exploiting the discrepancies between its newly industrialized coasts and still underdeveloped central and western regions.
To narrow down regional developmental discrepancies, in the Chinese political lexicon, can carry a lot of meaning, starting with building major public infrastructure, such as roads, railways, airports and connections with foreign countries.
What Li indicated was that whenever the economy needs to pick up overall growth, China just has to embark on a few more big-ticket infrastructure projects to more closely connect its coastal regions with central and western regions.
Proof was furnished almost right away. The National Development and Reform Commission announced on June 10 its approval of 126.7 billion yuan ($20.4 billion) in new investment in large infrastructure, including expansion of one airport and the building of three new airports and two railways.
Considering the fact that so much funding can be released in just a single day, more government investment plans can be launched from now to the end of the year.
To boost the growth rate by spending more on infrastructure building looks like a boring game in China because it has been done so many times in recent years. But it works better than other ways of boosting growth by bringing money directly to the workers－in their wages, which they can immediately spend, and by bringing future business opportunities to the so-far underdeveloped central and western towns.
Local people welcome new infrastructure, especially the high-speed railways, because they tend to increase their tourism revenue. Indeed, with China investing more in foreign countries, such a practice may even be exported. In the meantime, one should also notice what Chinese officials do not usually talk about the problems they face, urban employment for instance.
For all China's growth slowdown and related problems, and for its need for about 6 million new jobs for college graduates every year, it does not appear to be in an employment crisis.
By posting a resume online, middle-aged professionals with good skills or experience in leadership positions will easily be pursued by three to four potential employers, each offering a higher salary.
And the job market points to one other aspect: There are new companies and new growth industries, although most are still small, too small to offset the decline of old-fashioned steel mills and textile factories.
But those small companies will keep growing, now that the government's main policy orientation is to cut down on red tape and facilitate their growth.
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