Despite the impacts brought by the global financial crisis and deteriorating economic environment across the world, China’s economy still maintained rapid growth of 9% in 2008. A total of 30,067 billion yuan of industrial added value was achieved in 2008 and the economic aggregate reached up 30,000 billion. Agricultural production continues to see steady development, while grain output has grown annually. In 2008, the total grain output reached up to 528.5 million tons, 26.9 million tons more than that of 2007 and an increase of 5.4%. Increases in yields have been achieved for five consecutive years. Growth of industrial production has slowed down, and enterprises’ profits have fallen back. Industrial added value of enterprises above the designated size grew by 12.9% compared with that of 2007, but the growth rate has declined by 5.6 percentage points. Central and western regions are seeing rapider investment and industrial growth than eastern region, while the regional structure has been gradually optimized. The energy consumption per 10,000 yuan of GDP saw a year-on-year decrease of 4.21% in 2008. Positive progress has been made in saving energy, lowering energy consumption and building an energy-saving and environmentally-friendly society.
Investment has maintained rapid growth, with an upgrading investment structure. In 2008, the investment in fixed assets stood at 17,229.1 yuan, a year-on-year increase of 25.5% and seeing an increase of 0.7 percentage point in growth rate. Import and export maintained rapid growth in 2009, while the fourth quarter saw a significant decline in growth rate. The total volume of import and export stood at US $ 2561.6 billion, 17.8% higher than that of 2007. US $ 92.395 billion foreign investment was utilized in 2008, a year-on-year increase of 23.6%. The trade surplus was US $ 295.5 billion, and the foreign exchange reserve balance reached up to US $1950 billion. The growth rate of broad money supply has been quickened. The net issuance of currency reached 384.4 billion yuan in 2008, with an increasing number of loans.
Domestic market has seen rapid growth in sales, with booming consumption markets in urban and rural areas. In 2008, the total volume of retail sales of consumer goods reached 10,848.8 billion yuan, a year-on-year increase of 21.6%. The growth rate increased by 4.8 percentage points compared with that of 2007. Steady growth of employment was achieved in urban areas, while incomes of urban and rural residents continued to grow. In 2008, per capita disposable income or urban residents stood at 15,781 yuan in 2008, an increase of 14.5 compared with that of 2007, and the increase in real terms was 8.4%. The price markup represented a trend of from high to low, and maintained steady during the second half year. The consumer prices increased by 5.9% in 2008, and markup was 1.1 percentage points higher than that of 2007. Factory prices of industrial products grew by 6.9% and saw a year-on-year decrease of 1.1% in December. The markup was 3.8 percentage points higher than that of 2007.
China’s economic growth witnessed a turning point in 2008 due to internal and external factors. Its economy was facing three challenges of structural adjustment, business fluctuation and the global financial crisis. The target of China’s economic growth in 2009 is to ensure an annual growth of GDP. China has regarded expanding domestic demands as the fundamental solution to growth, coming up with the revival plan for the light industry and the program of “home appliances going to the countryside”. China’s light industry will be faced with both challenges and opportunities during the coming years.
In 2008, global economic growth stood at only 3.4%, 1.8 percentage points lower than that of 2007 and hit a record low since 2001. The global economy will continue to slow down in 2009, and developed economies will see recession. Rising and developing economies will witness significant readjustments, facing more risks.
Growth rate of developed economies increased to about 1% in 2008, while some countries and regions have witnessed economic recession. In the later half of 2008, the US saw obvious shrinkage in its economy. The decline of its GDP growth accelerated, while the Consumer Confidence Index was at the bottom in this country’s history. Drop of the retail sales at the end of the year hit a record low since 1993, while unemployment rate hit a new high in the past 16 years. The industrial output saw the first shrinkage since 2002. The American residents’ attitude toward consumption was changing, while the holiday sales in the country hit a record low in 40 years. According to the IMF’s prediction, the US will see a year-on-year decline of 1.6% in 2009. The Federal Reserve Board predicted shrinkage for the total economic output. According to the Securities Industry and Financial Markets Association, the economic recession in the US will continue to mid-2009 and the GDP will drop by 1% in 2009.
According the non-government think tanks in Japan, Japan’s GDP shrank by 12.1% in the fourth quarter of 2008, and the decline hit a record high in 34 years. In December, 2008, Japan’s production index of its industrial mining dropped by 9.6% compared with November, and the decline hit a record high since 1953 when the Japanese government began to gather the statistics on the index. The unemployment rate soared up 4.4% in December, and the increase hit a record high in 42 years. The sales volume dropped by 2.7% in December, and the decrease hit a record high in four years. The total household consumption dropped by 4.6% in December and the household consumption had shrunken for ten consecutive months by then. According to the IMF’s report, Japan’s economy dropped by 0.3% in 2008 and is expected to drop by 2.6% in 2009.
Figures posted by the European Commission show that consumer confidence dropped to the lowest level in 15 years in Euro Zone in November. In December, activities in the manufacturing industry and service industry in Euro Zone declined at an unprecedentedly high speed in at least ten years. The retail sales in Euro Zone had declined for seven consecutive months by December. The retailers in Euro Zone had laid off employees for nine consecutive months by December, and the number of slashed jobs hit a record high in over four years. The unemployment stood at 8% in December, the highest in recent two years. The industrial production continued to drop in November, by 1.6% compared with October and by 7.7% compared with November of last year. According to the IMF’s report, economy of Euro Zone is expected to drop about 2% in 2009.
Due to factors of significant decreases in global trade and prices of primary products as well as significant shrinkage of international investment and financing, rising and developing economies are going to face significant readjustments. Individual countries and regions will see economic recession. However, as a whole, their economic growth will continue at a higher speed than that of the global economic growth. According to the IMF’s report, China’s economy is expected to grow by 6.7% in 2009, India 5.1%, five ASEAN countries 2.7%. Russia will see a drop of 0.7% because this country is suffering severer impacts caused by sharp drops of oil price.
The global economic environment is still unclear in 2009. Developed countries might go through severe economic recession, which will impose pressure on export of China’s light industry. Meanwhile, deteriorating global economy will cut down on residents’ income, which will create opportunities for cheap light-industry products from China.