Sound fundamentals

Zuo Xiaolei, an analyst at China Galaxy Securities Co, said the country should have no problem achieving an 8-percent expansion next year given the still sound economic fundamentals of China's economy. She said if the policies worked well and people tried hard enough, the growth could go beyond 9 percent.

Zhang Liqun, a researcher at the State Council, or China's Cabinet, turned out to be the most optimistic, saying China's economy may grow 10 percent next year because of the huge potential for domestic consumption and investment.

Although the predictions were a little divided over the pace of growth, nobody denied the weight of the fiscal stimulus package and the monetary relaxation that China has unveiled so far.

"The macro-economic policy stance has shifted rapidly recently and has rightly become expansionary," said the World Bank.

To better navigate the economy, the bank offered some suggestions.

First, there is the imperative for maximum impact on domestic demand, growth and employment. Direct government spending, in the form of government direct consumption and investment, typically creates more economic activities than an increase in transfers or tax cuts.

Second, policies need to support the medium-term rebalancing and long-term development and growth agenda.

Third, flexibility and transparency in the implementation of expansionary policies is important.

(Shanghai Daily December 8, 2008)