One year after the onset of the financial crisis, the world economy appears to be rebounding sharply. Major economic figures are showing signs of improvement, a clear indicator that the worst has passed. The emerging markets, in particular, are returning to the fast-track growth on the back of powerful fiscal expansions. But a significant recovery has yet to take hold due to an acute chill on the job market, said Zhang Yuyan, Director of the Institute of World Politics and Economics at the Chinese Academy of Social Sciences, in an article recently published in the Economic Information Daily. Edited excerpts follow:

As stimulus plans take root globally, the world economy seems to be displaying signs that it has finally bottomed out. The industries of the major economic powers are regaining their strength while retail sales stage a steep comeback. Even the hardest-hit international trade sectors have eased the pace of decline within their respective industries. The International Monetary Fund (IMF) predicted that the world economy will grow 3.1 percent in 2010 after the deep contraction experienced earlier this year. The Institute for International Economics even forecasted a bullish 4.2-percent growth rate.

However, we should draw a clear line between rebound and recovery. The world economy has surely stopped bleeding, but that does not mean it is prepared for a substantial recovery. With a number of uncertainties still looming large, it remains to be seen whether the rebound can translate into a prolonged upward trend.

First, the developed world is still feeling the squeeze of a bleak job market. The United States, in particular, reported a considerable jobless rate of 9.8 percent in September. Such hefty unemployment figures are bound to weigh down economic activities and place a damper on consumption, which has traditionally been a significant driving force of Western economies.

Second, trade protectionism is once again gaining ground. While the IMF has stated that world trade next year will slowly convalesce from the financial gloom, questions are raised over a number of trade restrictions that may be nipping the recovery at the bud. China, for instance, has suffered 88 trade remedy investigations from 19 countries in the first three quarters of this year, most of which surrounded anti-dumping cases.

Third, in the wake of the economic washout, profligate American consumers have adopted a more frugal mindset, cutting back on unnecessary spending. The decline in their home values has only further encouraged Americans to save, especially for retirement. The U.S. savings rate has soared to 7 percent from minus 5 percent in 2005. This is obviously bad news for other parts of the world that rely on exports as a primary source of growth.

Fourth, while the global financial system recovers from the disastrous meltdown, it remains extremely vulnerable. American commercial banks now have around $200 trillion worth of assets on their balance sheets, 80 percent of which are financial derivatives sensitive to the interest rates. As a result, once the Federal Reserve raises the interest rates, it will put the financial industry in a difficult position, and cast a shadow over the economic recovery. In addition, the U.S. Government holds a record number of deficits, arousing worries over its economic security.

On China's part, it is necessary to keep a close eye on the world economy, and align its policies with the unfolding realities.