China facing economic crisis with decisive action needed

As the current economic crisis takes an even steeper stranglehold on the Chinese economy with exports bearing the brunt of the difficulties, Zhou Xiaochuan, the governor of the Central Bank of China, has announced that the country will provide a rapid response if needed to cope with the slowdown.

The government has made the announcement that any decision on the economy, and the need for a further stimulus plan, will be debated, although monetary policy will remain flexible in order to keep the focus on growth, as well as ensuring the stability of the currency.

China has enjoyed double digit growth and the Chinese premier in his latest address has indicated that the aim will be to keep growth up to either 8 or 9 percent.

When Wen Jiabao did not announce a second stimulus, it was a disappointment to many overseas investors, although a series of pro-growth policies and measures were introduced that have already been implemented including a 500 billion yuan reduction in the tax burden, as well as subsidies for affordable housing.

The greatest risk that is facing the Chinese economy is not domestically, it is the fact that demand has slowed and so as a result the government is confident that the 8 percent growth will be upheld and has dismissed the possibility of negative growth or recession.

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