2009's U-Style

The world economy was suffered dramatically in 2008,because of the finan- cial turnaoil.It is predicted that in the next years,China economic growth will slow down,and 2009 would not be the bottom,but the economy funda- mental is still healthy.A soft"U"turn can be expected in the future. Macro-economy Two of China economic growth pillar engines,export sector and real-estate industry have been significantly influenced by the global financial crisis,trends of this two sectors show that China could not be an exception in this economic tur- moil.The global economic turmoil has a significant negative impact on the export growth,and domestic imports also slow down since domestic demand has been weaken,(See Chart 1) As one of the pillar industry,real estate industry suffered a lot under national decline last year,with a national average drop of 4.7 percent on housing price.(See Chart 2)Domestic fixed-asset investment growth has also slowed down. China business cycle signal index shows that the macro-economics has been slowing down,and according to the history of China’s economy,this downturn would last at least 3 years,2009 would not be the cycle bottom.(See Chart 3) The business cycle signal index is declining from 117.3 in May to 94.7 in Octo- ber,the first time to drop under 100 from 1992,meaning the macro economic has been slowing down,but is still in the stable zone so far. Looking back at the history over China’s past 30 years,economic growth cycli- cal downturn would last at least 3 years.Standard Chartered Bank’s latest report reduced China GDP forecast for 2008 to 9.6 percent,a poor 7.9 percent in 2009,and even lower at 7.1 percent for 2010.(See Chart 4) China is believed to be shielded from chaos like US,and financial woes have limited impact on China.The country had rich resource reserves,great market po- tential,vigorous enterprises and the government had strong macro-control abilities. The major indicators are in healthy condition,which can help China government to fight the economy turmoil in 2009.