Foreign Media Pay Attention To Li Keqiang'S Pmission Of Confidence To The World

In recent decades, China has presented a dazzling economic catch up, characterized by a steady increase in labour productivity.

More and more people are moving from rural areas to cities, looking for jobs in industry and service sectors.

Productivity has also been boosted by government reform and the market is becoming more liberalized.

The process is still far from over, but further productivity gains will be milder.

The official Xinhua news agency quoted Li Keqiang, premier of the State Council of China, as saying: "China's economic operation is in a reasonable range and economic growth is at the forefront of the world".

According to the British Sunday times August 30th, Li Keqiang made the speech at an official meeting in August 28th.

He stressed that the measures adopted by the Chinese government to stabilize the market are "constantly emerging".

Canada's globe and Mail website published the 28 issue on August, entitled "no reason to panic in China, just caution".

The writer is Michael Menhat, chief economist of reinsurance group in Munich, Germany.

The article says that some people are issuing a warning that China will collapse. Others think it is hysterical.

The estimate of China's economy is almost the same as that of China's stock market.

But we should listen to two points.

The article argues that the sharp drop in the rate of economic growth is still far away from China, and that the slower growth rate may not necessarily lead to global disaster.

According to the Bundesbank, the German Federal Bank estimates that in the next two years, if China's real domestic demand is lower than the expected figure by 9%, then Germany's gross domestic product (GDP) will drop by about 0.3%.

The article says that the world is becoming more and more sensitive to risks.

The volatility of the global stock market is a clear reflection of this.

China's hard landing, the sudden sharp decline in economic growth, will bring serious consequences to the global economy.

Over the past five years, China's contribution to global economic growth has reached nearly 30%.

The contribution rate of investment to China's economic growth still stands at nearly 50%.

But now, Beijing hopes to reduce its dependence on investment - indeed, it must do so, because the mode of investment dependence is unsustainable.

On the contrary, it leads to overcapacity and wrong investment direction.

To cope with this, the government wants to promote personal consumption, which leads to an increase in wage expenditure and reduces the competitiveness of exports (another pillar of the Chinese model).

The accompanying slowdown is not only unexpected but also intentional.

The article says, but this is only part of the story.

The exciting growth of China always has the potential to create disturbances and setbacks.

Take real estate as an example: massive investment in the residential market is a major driving force for economic prosperity.

At the same time, the entire uninhabited ghost town is gaining popularity.

Or look at the corporate debt problem.

Corporate debt now accounts for more than 170% of China's GDP.

Too much investment is obtained through credit.

Finally, there is a recent dizzy stock market boom.

All these problems are not new to Beijing or to the rest of the world.

But the question is, what changes have taken place now?

The article says that the most important pillar of the economic miracle seems to be shaking, a pillar of the world's confidence in the following abilities of the Chinese leadership, namely, the ability to manage the largest domestic economic pformation in the history while not causing any great destruction.

No Western politician is believed to be able to face it.

The planned intervention can also help unswervingly promote prosperity and avoid crises.

However, the people in the world used to have almost unlimited confidence in China that China's state capitalism will work.

Undoubtedly, this is due to China's huge foreign exchange reserves, which can be used in emergencies and China's long-term success.

However,

At present, it is in a dilemma.

On the one hand, it wants to give the market bigger.

Let the crisis slip away naturally.

On the other hand, it intervened - as it has seen in dealing with the depreciation of the Renminbi or the sharp fall in share prices, and at the same time it shows that it does not always turn corruption into magic.

The greater the intensity of state intervention is, the article says, the more doubts about the robustness of China's economy, and the increase in incidental effects.

The depreciation of the renminbi is good news for exporters, but it also brings problems to Chinese enterprises.

According to the bank for International Settlements, China's current corporate debt has exceeded US $1 trillion in US dollars.

The article argues that there is no reason to panic that China will achieve 7% of the economic growth target this year, and that in the long run, it will become the world's largest economy.

Caution, however, is also justified.

The article said that perhaps the stock price is only a correction to the previous bubble.

Even the Chinese economy will encounter mild setbacks and serious setbacks. Without smart economic policies, it can be avoided.