China’s Economy Won’t Rebound from Bottom Soon.doc

China?s Economy Won?t Rebound from Bottom Soon When the data of China?s economy in Q2 was published, many experts and professional institutions declared that the economy would rebound after hitting the bottom in the following quarter. They describe the economic situation of China this year as a V-shaped pattern. However, the economic data in July almost crashed their optimistic thoughts. The data in August expected no good turning. Even Premier Wen Jiabao said:“The economic trouble might last a while.” For this issue, Xiang Songzuo, chief economist of the Agricultural Bank of China and deputy director of the International Monetary Institute at the People?s University of China, wrote down his own opinions: Now the situation is very clear. We do underestimate the severity and duration of the economic slowdown in China. That?s because we do not realize how weak the domestic demand of China and its influence over Chinese economy are. We also do not prepare well for the European debt crisis, American debt problems and slow global economic recovery. Then, we underestimate the problems caused by de-leveraging, debt inflation, balance sheet inflation and deviation of virtual economy from real economy. Lastly, we do not make full estimation about the hegemony of the US dollar the result of the monetary policy of quantitative easing. Here I made out four fundamental estimations: one, the international environment for China?s economic growth has apparently deteriorated as the four major risks are gradually going up; two, the internal driving force for China?s economic development is greatly weakened; three: the deteriorated external environment and weakened internal driving force lead to the obvious decrease in the effect of macroeconomic adjustment and control, say, the traditional monetary easing and fiscal stimulus won?t function as well as before; four, the only solution is the deepening of the reform to economy and political system – the breakthrough of the ref