Wen's Call to Boost Export May Mean Little: Analyst


by NTDTelevision

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Chinese Premier Wen Jiabao was in Guangdong province over the weekend. China’s manufacturing and export hub has been hit hard by the worldwide economic slowdown and factories are filing for bankruptcy.

This is a worry for the ruling Communist Party. Economic growth has been the main tool it uses to maintain control, and a major slowdown would threaten jobs and stability. Wen Jiabao knows this. According to state-run Xinhua News Agency, Wen said during his weekend trip that, “the third quarter of the year is a critical period for China to realize the year’s export growth target and we should take targeted steps to stabilize growth.”

Wen did not spell out any specific plan though, and NTD’s Senior China Analyst Jason Ma says that’s because there is little the Chinese regime can do to boost exports—because it’s linked to external factors.

[Jason Ma, NTD Senior China Analyst]:
“To stabilize exports I feel is only a slogan. There is nothing specific that can be done. In other words, this possibly shows that Wen Jiabao is feeling rather helpless given China’s current economic situation.”

China’s export in July grew by just 1%, significantly lower than expected. Manufacturing for August has also fallen, according to preliminary estimates released by HSBC Corp last week.

Chinese regulators have, in the past, poured funds into public projects to boost spending and stimulate the economy. Ma says these spending yield little return, and is not a viable solution.

[Jason Ma, NTD Senior China Analyst]:
“The Communist Party can only use government spending to boost so-called internal demand. But the result is that the funds are used with very little efficiency, because government investment is usually the least efficient method of consumption.”

Following the depressed export figures, HSBC Bank on Monday lowered its forecast for China’s GDP for this year from 8.4% to 8%.

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