Yao Jingyuan:auto provide impetus to China

Total Imports And Exports in November 2008 was negative 9 percent but the figure in the November 2007 was 23.9%.The exports in November 2008 was negative 2.2 percent compared with the 2.8% in November 2007.There was also another big problem in November 2008 ,our imports also turned to negative 17.8 percent. The changes of China’s imports and exports can tell us what? When we see our exports dropped sharply and even turned negative, media such as televisions and newspapers report that the external demand of Chinese goods has been shrinking sharply. In addition, the phenomenon of our imports' turning negative can tells us that China’s economy in November 2008 was also shrinking.

Currently, China’s economy is experiencing unprecedented difficulties and challenges, and we can recognize that the beginning of the difficulty was from exports. The decline of the exports directly led to the fall of industrial production. Let us have a look at China's industry , its growth in the first quarter of 2008 was 16.4%, 15.9% in the second quarter of 2008, 16.9% in the third quarter of 2008, and 8.2% in October of 2008, 3.8% in January 2009 and February 2009, the lowest point since 1991.

We all know industry is an important force in supporting the entire national economy, the decline of the industry production will lead to the fall of the growth of the entire national economy. Then let us look at China's economic growth rate,10.6% in the last first quarter, 10.1% in second quarter , 9% in third quarter and 6.8% in the fourth quarter .In the first quarter of this year, the economic growth rate was 6.1%, the lowest point since China began to calculate the growth of GDP. We can clearly find that it was the decline of the exports that led to the decline of the economic growth of the national economy.

Furthermore, let us look at our country's fiscal revenue , the growth rate of country's fiscal revenue in the last first quarter was 35%, the figure was very good, 31.4% in the second quarter, then declined to 10.5% in the third quarter and even turn to negative 3.1 percent in the fourth quarter. Therefore, we can clearly recognize how China’s economy is affected by the financial crisis. Firstly, the financial crisis led to the decline of our exports and then can led to the decline of our industrial growth, the decline of our industrial growth then led to the decline of a series of important indicators such as fiscal revenue and so on. Based on the above fact we can finally understand of the meaning of the words said by Prime Minister Wen Jiabao, the financial crisis has made the pressure increased on China’s economy down.

From the second half of last year, China’s economy mainly faces 4 difficulties:

Firstly, the sharp decline of external demand. The exports growth in February this year was negative 25.7 percent, negative 17.1 percent in March this year, then negative 22 percent in April, now still negative 23 percent in July. Generally, the situation is satisfactory but compared with the same period of last year, the situation is rather awful. The condition of external demand is still grim, if we want to help our economy back to normal growth trend, we shouldn't only depend on the recovery of the world economy, although the economy of USA and Europe are beginning to recover slowly. The world still has a long, tortuous and complicated process to get out of the crisis.

Secondly, the problem of excess production capacity is very obvious. Secretary Chen has done a profound exposition just now, thanks to the sharp decline of the external demand and the domestic economy is still in difficulties, so the excess production capacity stands out. I have some similar ideas with Secretary Chen on steel industry. Steel industry has a deep impression on my mind because it once was the most glorious industry of People's Republic Of China. Most of you here are entrepreneurs and you may all know that when Japan invaded China in 1931, there were some people who believed China couldn't defeat Japanese, one of the reasons was steel, then our annual steel output was 50,000 tons, Japan's was 5 million tons.

Until 1949 when China was founded, our annual steel output reached 150,000 tons. Compared with the past, daily output of the steel in the first half of this year was 1.6 million tons, more than 10 times of the annual output in 1949.Until 1978, when China began to enforce the policy called “Reform And Opening-Up”, the percentage China's steel output in the world accounted for only 4%. Although the percentage has risen to 40% now, we are still worried about the production capacity. Excess steel production capacity led to the price of steel plunged last November and the price of steel began to rebound again last December and January this year, then the price of steel fell again February. In my opinion, the reason why the price of the steel is not stable is influenced by the government's policies to expand the domestic demand and the excess production capacity, so the steel industry is always in volatile state.

Thirdly, the enterprises have met a lot of difficulties, especially in production and management. Moreover, the relationship between financial revenue and expenditure of enterprises is inclined to lose balance. Generally, now the enterprises’ production is still in difficulties, take whole corporate profit for example, the profit was negative 37.3 percent in the first two months this year. In July, the corporate profit reversed from negative to positive, but was still in lower level. Considering the financial revenue and production and management of most enterprises are still faced with difficulties, Chinese government still need to implement positive fiscal policy to give them a hand.