CHINESE LEADER SAYS CHINA LOSING COMPETITIVE EDGE

[Anonymous]

http://news.yahoo.com/s/ap/20081130/ap_on_bi_ge/as_china_economy;_ylt=AmPfD2iTwSDYFEvPPzRAafPCw5R4
Chinese leader says China losing competitive edge
BEIJING
– Chinese President Hu Jintao warned that China has started to lose its
competitive edge in trade amid the global financial crisis, as he told
Communist Party leaders the challenge posed a test to the government’s
ability to rule, state media reported.China’s economic growth is
expected to fall to about 9 percent this year, down from last year’s
11.9 percent. That would be the fastest of any major economy, but
Chinese leaders worry about possible unrest as unemployment rises,
especially in export industries where factories are shutting down as
global demand plummets.

“External demand has obviously weakened
and China’s traditional competitive advantage is being gradually
weakened,” Hu said, according to the Communist Party’s official
People’s Daily newspaper.Hu told members of the Communist Party’s
powerful Political Bureau that the financial meltdown posed critical
challenges to a government that has staked its legitimacy in part on
competent management of a rapidly developing society.”Whether the
pressures can be turned into a driving force and the challenges turned
to opportunities … is a test of our ability to control a complex
situation, and also a test of our party’s governing ability,” Hu said.

Hu
urged party leaders to step up efforts to reform its economic growth
model to achieve development that is sustainable.He said greater effort
should be made to raise living standards, use resources more
efficiently and develop rural and urban areas, the report said.The
remarks come after China’s top economic planner Zhang Ping, chairman of
the Cabinet’s National Development and Reform Commission, warned
Thursday that the impact of the global financial crisis is worsening
and that rising job losses could fuel instability.

But a
government researcher said that despite the impact of the global
slowdown, the country’s economy is expected to grow by 10 percent next
year as domestic consumption grows with rising personal
incomes.”Personal income continues to increase as millions of migrant
workers flow into the city to get their lives improved. Enlarging
demand for houses and autos will form huge and lasting consuming
power,” said Zhang Liqun, a researcher at a think tank attached to the
Cabinet’s planning agency.

On Wednesday, Beijing announced its
biggest interest rate cut in 11 years to increase consumer and company
spending. A multibillion-dollar stimulus package launched on Nov. 9
aims to boost growth through heavy new spending on construction, tax
cuts and aid to the poor and farmers.Beijing plans to spend 18 trillion
yuan ($2.6 trillion) in 2009 alone to help blunt the impact of the
global financial crisis, using the immense capital accumulated over
years of double-digit economic growth and booming exports to build
railways, roads, airports and electricity networks.

[Author]

December 1, 2008 at 11:48 AM