How did the media react?
The mainland media sounded triumphant. China Daily declared: “Just a few months ago, many economists thought China’s growth would be in the range of 6% to 7% this year.” But the latest GDP figure renders the country “the best-performing major economy in the world.”
Xinhua took the opportunity to point out that the government has “single-handedly” put the country back on track to hit its growth target of 8% this year. The commentary went on to say that “such inspiring growth figures have, as expected, brought an end to domestic debates on whether the Chinese economy would see a V-shaped recovery.”
The Western press agrees that China’s rebound is a rapid one. Patrick Collinson at the Guardian wrote: “In Britain, GDP is falling rapidly and unemployment soaring. Yet most of us still hold our unit trust and pension investments in UK stocks and shares. Is it time to switch to the Far East?”
The Wall Street Journal credited Beijing’s all-out commitment for turning around an economy much faster than many thought possible. The paper also pointed out that the growth has continued to help fund American’s efforts at recovery: “China lifted its Treasury holdings by $38 billion in May to a total $801.5 billion, cementing its stronghold as America’s biggest creditor and increasing its importance for US policy makers.”
So is China’s economy out of the woods?
While the domestic press was pleased with the good news, they cautioned too that the basis of the rebound was not stable. Some reported on Premier Wen Jiabao’s meeting with businesspeople two weeks ago in which he warned: “An improving trend in the economy does not mean that this difficult period is over.” Other Chinese papers pointed to weak exports and rising unemployment as areas of growing concern.
The Western media urges against premature celebration. Many are warning against inflation. The Wall Street Journal believes that “bubbles are forming in China”. The Economist thought that the pace of state-directed bank lending is unsustainable: “America’s recent experience suggests that it is better to prevent bubbles from forming than to mop up the mess afterwards.”
A return to optimism?
Mainland media believe it is critical that the government continues to boost domestic consumption. “It is time to set in motion a consumer-led recovery,” urged Xinhua.
On Xinhua Net, Wang Wenwu urged the government to spend prudently too. Urban fixed asset investment rose 33.6% in the first half of 2009, the largest increase in five years. Wang warned that overly aggressive infrastructure spending could lead to wasteful investment.
The New York Times reckoned that the growth spurt is presenting a new set of challenges, including “worries that record bank lending could result in… a large jump in non-performing loans.”
And last Friday, China’s Finance Ministry failed to complete a bill auction for the third time in two weeks. It sold Rmb18.51 billion ($2.71 billion) of six-month bills with a 1.6011% coupon. But it wanted to issue Rmb20 billion, and the market had expected a rate of between 1.4% and 1.5%.
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