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UPDATED: March 13, 2009 NO. 11 MAR. 19, 2009
Positively Convinced
After reporting a sharp slowdown in the fourth quarter of 2008, the country's next step on the path to recovery is coming into focus

The global financial crisis has also brought opportunities for the culture industry, because in a slumping social environment, people feel more pressure in various respects, and they need more relaxation and confidence. This is what the culture industry can provide. Data show that since this January, China's culture industry has grown 15-18 percent. In some fields, growth has even reached 30 percent.

Therefore, the government must vigorously develop the culture industry to drive up domestic demand. First, it should formulate some policies for the culture industry during the special period, such as formulating tax policies to support the culture industry and reduce ticket prices for commercial performances. Second, it should establish and improve the government-led investment and financing mechanism for the culture industry to thoroughly solve its financing difficulties. Third, the government should participate in the creation of large cultural companies.

Managing Local Financing Platforms

Zhang Binggong, deputy to the 11th NPC and Commissioner of the National Auditing Office in Chongqing

The Central Government plans to invest 1.18 trillion yuan ($172.51 billion) within two years, creating up to 4 trillion yuan ($585 billion) in local and social investments. A large portion of these funds must be raised by local governments and companies. Under these circumstances, the investment and financing platforms of local governments will play an important role.

In recent years, local governments have established investment and financing platforms such as investment companies and asset management companies, mainly serving urban infrastructure construction, small and medium-sized enterprises and education financing. These platforms have made significant contributions to local economic and social development, but still have problems and risks during operation.

For asset safety, banks are willing to grant loans to government-led projects. If local governments have fiscal difficulties and cannot invest enough funds in the projects, bank capital has to play the role of fiscal funds, thereby increasing the banks' risk of having nonperforming loans and endangering financial safety. During this round of massive investment to maintain economic growth, problems in local investment and financing platforms may become distinctly evident.

Therefore, I suggest the state formulate regulations on local investment and financing platforms and establish mechanisms for pre-warning and preventing risks as soon as possible.

Not So Bad After All

Li Yining, Vice Chairman of the Committee for Economic Affairs under the 11th CPPCC National Committee


The work report delivered by Premier Wen Jiabao confirmed the government's commitment to holding up domestic growth and also outlined a national campaign to contain the ripple effects of the global financial storm.

Obviously, China has learned the lesson from other countries that a sluggish response to the downturns delays the restoration of confidence. By making sizeable investments in infrastructure and social welfare, the country is gearing up to pick up some of the slack in the export sector.

Given the enormous scale of the stimulus package, I believe the target of 8-percent growth for this year is achievable. Although it is far from clear whether the export sector has put the worst behind it, domestic demand will be able to provide an expected spur to GDP growth. But the infrastructure spending spree should not overshadow the much needed shift in China's growth model towards domestic consumption and services, which would be more sustainable in both economic and environmental terms.

One looming concern is that the drop in exports is exacting a heavy toll on employment, which holds the key to social stability. The target of creating 9 million new jobs this year, reiterated in Premier Wen's work report, will not be easy to fulfill as there will be some lag before the economic recuperation works through the job market.

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