A year after Lehman collapse, China still learning
- Source: Global Times
- [01:42 September 15 2009]
- Comments
A year ago today, the collapse of Lehman Brothers triggered the ongoing global financial crisis, the lessons of which are still being learned all over the world, as the collapse's impact continues to be felt.
China is no exception. Though it is often thought of as the biggest winner in the "new" world order emerging from the financial crisis, China has too many casualties to count and too many short- and long-term questions to answer.
The crisis sprang from the inherent flaws in the US financial system. China's voice has thus been more widely listened to globally, as the country has been less hard hit and is rebounding faster than others.
But even with a higher-profile role in the new world order, China has neither the ambition nor the ability to challenge US hegemony.
There is a long way to go before the winds of fortune really change. While its rapid economic growth in the past 30 years enabled China to launch a $586 billion stimulus package, which has proved effective, it is the relative insulation and lesser development of China's banking system that has largely contributed to its survival in the crisis.
The crisis has also been a huge blow to China's export-dependent economy. Its impact has spread so far that double-digit GDP growth slowed down to 6.1 percent in the first quarter of this year, about 7.5 percent of small- and mid-sized enterprises closed, and as many as 20 million migrant workers lost their jobs.
The great social risks buried in the crisis pose tough challenges to the Chinese government, too. With the soaring number of unemployed and the widening divide between the rich and the poor, social unrest has become more apparent with quite a few "mass incidents" occurring in the past year.
The questions China faces are these: How to boost domestic demand? How to create job opportunities for laid-off workers? And above all, how to restructure the country's economy and make it more sustainable?
Finding answers is key to China's economic recovery and long-term development.
In Chinese, the word for "crisis," weiji, connotes both "danger" and "opportunity." The Chinese government should take the valuable opportunity presented by the financial crisis to further reforms.
China certainly needs an immediate cure to the financial crisis. But what is more needed is firm determination and prompt action to build up the foundation of China's society and economy. With quality prioritized over speed, the needs of vulnerable groups must be met, and social justice must be delivered.
As Lehman's bankruptcy is remembered, the Western world is reflecting on whether real efforts have been made to reform the global financial system, or if it was just temporarily saved from the economic crisis.
China should also be reflecting on its own crucial lessons. The lessons are bitter, but it is not too late to learn.
