Monday, September 13, 2010

Is Chinese Premier Wen Jiabao a Keynesian?

It sure sounds like it based on the speech he delivered today at Summer Davos 2010 . Among the points he made:

The past two years have seen China emerge as one of the first countries to achieve an economic rebound and maintain steady and relatively fast economic development under extremely difficult and complex circumstances. We owe our achievements to the comprehensive implementation of the stimulus package. At the height of the international financial crisis, China's economic growth rate dropped by a big margin. Many enterprises completely or partially suspended operations, and some even closed down. Many workers lost their jobs and a large number of rural migrant workers had to return to their home villages. In view of this, we acted immediately to introduce a stimulus package. From the second quarter of 2009, the downward trend in economic growth was quickly reversed. The economy grew by 9.1% in 2009 and 11.1% in the first half of 2010. Urban employment has kept expanding, people's income has been increasing, and social stability and harmony has been maintained. As a Chinese saying goes, one would never fully appreciate the difficulty unless he has experienced it in person. For a country like China with 1.3 billion people, without a certain rate of economic growth, full employment and people's well-being can only be empty talk. The stimulus package has enabled us to not only maintain the current economic growth and social stability, but also, and more importantly, secure the sound momentum of economic development....

We have implemented a pro-active fiscal policy and a moderately easy monetary policy with an unprecedented intensity, and at the same time successfully kept fiscal and financial risks under control. In the past two years, China's budget deficit and government debt have been kept below 3 percent and around 20 percent of the GDP respectively...

By implementing the stimulus package, we have not only maintained China's economic stability and relatively fast economic growth, but also made important contribution to the world economic recovery. At a time of negative economic growth for major developed countries, the fast economic stabilization and rapid economic growth of China and other major developing countries greatly boosted international confidence in overcoming the financial crisis and provided a strong impetus to the world economic growth.
Wen's entire sppech is here.

No comments:

Post a Comment