Chinese President Hu Jintao (胡錦濤) warned that China has started to lose its competitive edge in trade amid the global financial crisis as he told Chinese Communist Party (CCP) leaders the challenge posed a test to the government’s ability to rule.
China’s economic growth is expected to fall to about 9 percent this year, down from last year’s 11.9 percent. That would be the fastest decline of any major economy, but Chinese leaders worry about possible unrest as unemployment rises, especially in export industries where factories are shutting down as global demand plummets.
“External demand has obviously weakened and China’s traditional competitive advantage is being gradually weakened,” Hu said, the People’s Daily newspaper quoted him as saying.
Hu told members of the CCP’s politburo that the financial meltdown posed critical challenges to a government that has staked its legitimacy in part on competent management of a rapidly developing society.
“Whether the pressures can be turned into a driving force and the challenges turned to opportunities ... is a test of our ability to control a complex situation, and also a test of our party’s governing ability,” Hu said.
He urged party leaders to step up efforts to reform its economic growth model to achieve development that is sustainable.
He said greater effort should be made to raise living standards, use resources more efficiently and develop rural and urban areas, the report said.
The remarks came after National Development and Reform Commission Chairman Zhang Ping (張平) warned on Thursday that the impact of the global financial crisis is worsening and that rising job losses could fuel instability.
But a government researcher said that despite the impact of the global slowdown, the country’s economy is expected to grow by 10 percent next year as domestic consumption grows with rising personal incomes.
“Personal income continues to increase as millions of migrant workers flow into the city to get their lives improved. Enlarging demand for houses and autos will form huge and lasting consuming power,” said Zhang Liqun (張立群), a researcher at a think tank attached to the Cabinet’s planning agency.
Beijing said it would spend 18 trillion yuan (US$2.6 trillion) next year to help blunt the impact of the global financial crisis.