OpinionWhat China can learn from the US economic recovery
Hu Shuli says just as post-crisis adjustments have paid off in the US, restructuring is the right remedy for a slowing Chinese economy
The end of the Sino-US strategic and economic dialogue this year has left us with plenty to think about. The economic health of both countries, for one, is of great concern, and debate is fierce on where things stand and where they're headed.
China's economic data has cast a chill over the land of late, the summer heat notwithstanding. Both exports and imports unexpectedly declined in June, with import growth slowing considerably in the second quarter, according to the General Administration of Customs. Stripping out the cyclical Lunar New Year effect on such trade, the last time a double dip happened was in October 2009, when the global financial crisis was really biting.
The official purchasing managers' index also fell in June, to just a touch above the 50-point level that indicates growth, while HSBC's PSI survey fell to a nine-month low, underscoring the slowdown in manufacturing. Meanwhile, the producers' price index has been in decline for 16 straight months.
These numbers show that while China's overall economy remains stable, it is increasingly under pressure. In this context, Finance Minister Lou Jiwei's comment that China could endure a slowdown to 6.5 per cent growth was interesting.
This is not a time to lose our head or our confidence. China should be worried, but some straight thinking would show that hopes for a turnaround lie in structural reform.
The pain of reform is unavoidable; enduring it will test our leaders' resolve
America's experience proves this point. Just a few years ago, the US economy had seemed hopelessly depressed. After the body blow of a financial meltdown, the economic adjustments were many and painful. Yet, three years later, a recovery is clearly under way. Various economic indicators are picking up, with some even topping the pre-crisis figures.