China Outpaces Its Rivals on Road to Recovery
As the United States and Europe reel from the impact of the global economic crisis, China is rising rapidly to capture the top spots in many global industries. As it uses powerful government-led policies to thwart an economic slump, China is overtaking its rivals by focusing on competitive industries. Many economic experts forecast China will lead a worldwide economic recovery. But some experts point out that it will take more time to be able to verify China's true economic might, since many of its industries rose to the top the easy way, by being fueled by its massive domestic market.
◆ Realigning Global Rankings
Using the global crisis as an opportunity, China is beating out the world's advanced countries in various fields. The People's Daily reported on Monday that Chinese banks ranked top in the world last year in all areas, including profitability. The newspaper reported that the combined post-tax net profit of Chinese banks last year was 583.4 billion yuan (US$1=6.84 yuan), up 30.6 percent compared to 2007, which is the highest in the world.
According to Daewoo Securities, China's three-largest banks -- the Bank of China, China Construction Bank, and the Industrial and Commercial Bank of China -- were found to have outranked the top U.S. banks -- JPMorgan, Bank of America and Citigroup -- in terms of market capitalization and net profits in November and December of last year. In January of this year, automobile sales in China totaled 736,000 vehicles, outpacing the United States for the first time, where 671,000 automobiles were sold over the same period. In March, China's automobile sales outpaced sales in the United States by 240,000 vehicles. China also holds US$618.2 billion worth of U.S. treasuries, overtaking Japan back in September of last year.
◆ Soaring with Growth Momentum
Various indicators of Chinese recovery show that the country's economic growth momentum will continue. Chinese stock prices have increased 34.2 percent so far this year, which is the largest margin among equity markets in the world's major countries. Global economic experts have rosy forecasts for China's economy. Martin Feldstein, an economics professor at Harvard University, said in an interview with Chinese media on Apr. 6 that China would be the first country to emerge from the crisis. Feldstein claimed that in 2010, the Chinese economy would enter a new phase of growth. Nouriel Roubini, an economics professor at New York University, projected that China’s rights and responsibilities on the global stage will increase, while the Asian giant will wield more power than it does now.
◆ Lingering Uncertainties
Although the Chinese government is confident that its economy will recover, there are still many things to remain wary about. First of all, China's exports during March dropped 17.1 percent compared to the same period last year, continuing five straight months of decline. Housing sales in March also fell 1.3 percent year-on, continuing the fourth consecutive month of drops. Another uncertainty is the illusion created by the continued discrepancy in figures announced by Beijing and forecasts by private economic research institutes. Pyo Min-chan, professor of business administration at the University of Seoul, said many Chinese businesses end up rising to the top positions in the world in their respective fields because of China's vast domestic market. He added that Chinese businesses need to be tested further in order to determine their true capacities.