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China's economic performance amid global downturn affirmed
(Xinhua)
Updated: 2009-11-12 21:58 BEIJING: China's robust government finances and adequate institutional strength had contributed to its strong recovery from the global downturn, according to a senior official of Moody's Investors Service, a world leading ratings agency. Tom Byrne, senior vice president of Moody's, made the statement Thursday in a forum on China's banking and sovereign outlook in Beijing.
The Chinese government has successfully steered the economy through the turbulence of the global financial crisis and recession, Moody's said in its report. China kicked off its four-trillion yuan ($586 billion) stimulus plan last November, which was due to run its course by the end of 2010, and had adhered to proactive fiscal and moderately easy monetary policies ever since. "The stimulus program is a success. It is pushing the economy, helping the growth, and it had brought a lot of infrastructure investment, prevented a lot of job losses and many bankruptcies that might happen without the stimulus," Byrne said. The stimulus package that the government is implementing to maintain growth is having only a modest effect on China's public finances, according to the report. China's banking system was also emerging from the crisis in a relatively strong position, Moody's said. The ratings agency attributed the system's strength to withstand "stress scenarios" to the country's largest banks' solid earnings, loan-loss reserves and capital-adequacy ratios. Byrne said Moody's confidence in China's economic and ratings outlook came from the country's institutional and regulatory strength. "China has adequate institutional strength. Chinese policy-makers are not just sitting by. They keep vigilant, anticipate future problems and take preemptive steps to prevent things going worse," he said. When asked about the risks that government spending might bring about, he said, "recognizing some risks, our basic view is that the infrastructure spending and investment spending in China will be economically valuable." "Inflation is not a threat to macroeconomic stability for now," said Byrne, noting that the time for tightening shouldn't come until "the economy grows on a firm footing and inflationary pressure builds up." Byrne said Moody's forecast China's goal of 8 percent growth rate for 2009 was achievable, and the figure for 2010 could reach 8.5 percent. China's gross domestic product growth accelerated to 8.9 percent in the third quarter and the figure for the first nine months reached 7.7 percent year on year, according to the National Bureau of Statistics. Moody's said that, before giving China a higher rating, it needed to be reassured that China would maintain its progress over the next 12-18 months and the stimulus program did not lead to asset bubbles. |
