The global economy saw a fair amount of recovery in 2010. Along with the implementation of a series of macroeconomic policies, the Chinese economy has been back to the track of stable and comparatively fast development. However, the pressure of renminbi appreciation and the inflation have required further adjustment of macroeconomic policies. Some of China's brightest economic minds have spoken out about the changes that have occurred over the last year; their comments can be read below.
Chen Jiagui, member of the Standing Committee of the National People's Congress, and Director of the Economic Division of the Chinese Academy of Social Sciences:
China's GDP growth will increase by 9.9 percent in 2010
On December 7, the Chinese Academy of Social Sciences released the 2011 Blue Book on China's Economy, predicting that China's GDP would grow by 9.9 percent in 2010.
"In 2010, the global economy mostly has the sigh of recovery from the financial crisis," said Chen Jiagui. "With the help of a proactive fiscal and a moderately loose monetary policy, the Chinese economy has stabilized and is now back to its previous state of comparatively fast development," said Chen. However, inflationary stress has also increased in this time. China's consumer price index (CPI) grew quickly in the second half of 2010, by 4.4 percent as of October.
Chen also pointed out that macroeconomic control has become one of the main factors to impact China's economy. The Central Government has introduced a series of policies to regulate China's real estate market and control the rise of the price. Since real estate investment accounts for nearly 20 percent of fixed asset investments in urban areas, Chen believed that the regulation and control of China's real estate industry will produce downward pressure on the Chinese economy. In addition, debt financing for local governments has also expanded, which has increased the debt repayment risk for these local governments. With several measures in place to help clean up local financing platforms, the growth of fixed asset investments will gradually slow down. In general, China's economic growth mode driven by inner momentum has formed while for a short period of time the economy will drive by investment and consumption.
Liu Shijin, Deputy Director of the Development Research Center under the State Council: Consumption has changed from being policy-driven to being market-driven
The Blue Book report showed that China's total investments in 2010 would increase by 23.5 percent, with urban investment increasing by 24 percent and rural investment increasing by 21 percent. China's economy is largely driven by consumption, but there is also an increasing reliance on investment.
Consumption increases in 2010 have changed from being policy-driven to market-driven. In countering the global financial crisis, the Chinese Government created many policies to stimulate domestic consumption. Record sales of automobiles, household appliances and furniture resulted in a 16.9 percent increase in domestic consumption. However, the effect of the policies appeared to be decreased by the end of 2010; the increase of actual consumption has largely halted, but momentum remains strong.
Liu Shijin pointed out that the increased amount of investment is a sign that the Chinese economy has successfully countered the negative effects of the global financial crisis and is back on a solid track. However, overall investments were slowed around the end of the year by decreases in real estate investing. China's high export figures have certainly been influenced by the slower recovery of the world's other large economies.
Zhang Liqun, researcher at the Development Research Center under the State Council: Gradual exchange rate reform and a prudent monetary policy are necessary
The exchange rate of the renminbi was hotly debated in 2010. "The renminbi exchange rate cannot continue to appreciate so quickly in such a short period of time," said Zhang Liqun.
The renminbi exchange rate is a huge issue which touches on many aspects of the world's economy. As is stated by Chinese Premier Wen Jiabao said at the sixth China-Europe Business Summit in Brussels in October that "the world will by no means benefit from an appreciation of the RMB by 20 percent to 40 percent, because it will damage the Chinese economy, and the Chinese economy contributed about 50 percent of the global economic growth in 2009."