Editorials

Tough policy choices

(China Daily)
Updated: 2010-05-17 08:00

Editor's note: The different domestic and international situations mean Chinese policymakers might need to make hard decisions that are certain to address domestic concerns, but without the benefit of any tailwinds from abroad.

Premier Wen Jiabao's tough warning that the Chinese economy faces difficulties and challenges despite showing strong growth momentum recently is fresh evidence that the current economic situation, both at home and abroad, is extremely complex.

Last year, policymakers realized that all they had to do to combat the most severe global recession in decades was to stimulate economic growth as quickly as possible.

The higher-than-expected GDP growth of 8.7 percent has demonstrated how successful they have been in countering the global crisis during the most difficult year for the Chinese economy in the new century.

This year began with a first-quarter GDP growth of 11.9 percent. Yet this year is unlikely to be defined again by the sheer speed of economic growth.

Instead, it is the hard choices that the policymakers make this year - between ensuring short-term growth momentum and pursuing long-term economic health - that will determine the real progress of the economy.

Accelerating inflation, runaway property price hikes and a step backward on energy conservation have seriously threatened to unravel the country's pursuit of sustainable development.

In April, China's consumer inflation rose 2.8 percent to an 18-month high even as property prices jumped 12.8 percent from a year earlier, the fastest pace on record. And, an unexpected surge in energy intensity in the first quarter left the country further behind in its schedule to cut use of energy per unit of GDP by 20 percent between 2006 and 2010.

While policymakers find it increasingly necessary to prevent an overheating of the economy, curb asset bubbles and seek greener growth, the darkening global growth outlook, especially after the public-debt crisis in Europe escalated recently, has considerably added to the risk of a hasty exit from stimulus policies.

The different domestic and international situations mean Chinese policymakers might need to make hard decisions that are certain to address domestic concerns, but without the benefit of any tailwinds from abroad.

(China Daily 05/17/2010 page8)