Ever since January 14 when the Chinese Government unveiled plans to revamp the steel and automobile sectors, the country has embarked on an ambitious and comprehensive scheme of restructuring some of its key industries. This was done in an effort to keep the economy on track amid an adverse economic situation. Eight other sectors have been added into this revitalization package, ranging from electronics and information technologies to textiles, shipbuilding and petrochemicals, making up the list of industries identified for revival over the next three years. This also reflects China's resolute determination to maintain 8-percent growth for 2009.
Like many other countries, China has been hard hit by the global financial turmoil. The export sector, the engine driving the country's remarkable economic success over the past decades, has suffered considerably, forcing hundreds of thousands of export-oriented businesses to close or cut down production. Various economic indexes also indicate just how tight times are. Worse still, domestic consumption remains inadequate to offset the effects of declining exports. Even the automobile and real estate sectors, which have contributed significantly to stimulating demand and boosting growth in recent years, seem to have lost stamina.
It is against this background that China has decided to revitalize these industries, for which specific guidelines and strategies have been introduced to ensure effective implementation. These industries have invariably played an important role in propeling China's economic development. They account for about one third of the nation's GDP, and the combined corporate taxes they pay stand at almost 40 percent. Moreover, some of these industries have taken on a fairly large army of labor, and through restructuring and consolidation, they are expected to absorb part of the abundant labor resources and help relieve the tough unemployment situation confronting China.
Addressing the pressing issue of an economic slowdown represents perhaps only one short-term aspect of this industry revitalization effort. The other long-term task will be to restructure and rationalize the nation's industrial make-up, and build these industries into more competitive pillars of the Chinese economy. Indeed, from the global context, a good number of China's industrial sectors have run into problems that not only have impeded their respective growth, but also affected the overall development of the country: overcapacity, lack of core technologies, lower added-value, undue reliance on global demand, huge energy consumption and serious environmental pollution, to name just a few. Only when these and other existing problems are properly resolved will China have a sound and consolidated industrial base to further its economic construction and sustainable development.
Will these industry-stimulus plans succeed in fulfilling the anticipated objectives? While there may be different expectations and opinions with regard to the actual results, the general reaction of the broad public has been one of approval and optimism. And there are good reasons for this favorable response, given that the fundamental aspects of the economy are largely unaffected and that there remain positive factors, such as great potential for consumption and strong and effective leadership adept at exercising macroeconomic management and mobilizing resources to cope with emergency and crisis.