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Economic moves to avoid China crisis

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Economic moves to avoid China crisis


The economic crisis is so widespread, it is even touching on recurring political themes in China. At the opening of the annual session of the Chinese parliament the prime minister Wen Jiabao hinted that his government was ready to put aside its differences with Taiwan, and start talking.

Beijing laid claim to Taiwan, where Nationalists had taken refuge after being beaten by Mao’s communists in 1949. But the financial crisis has acted as a catalyst to speed up commercial and investment plans as relations between the two have improved. Delegates from all over China went to Tiananmen Square with the sharp drop in economic growth, a spike in unemployment, and public protests high on their agenda. Last November, the government announced a stimulus package worth 467-billion euros to try to stem the fall in output – standing at 6.8 per cent in the final quarter of last year. Analysts believe the Chinese economy needs to grow by at least eight per cent in 2009 to keep unemployment in check. Officially, the jobless rate is running at 4.2 per cent, but some economists reckon the true figure is at least double that. Wang Zhiyong from the Chinese Academy of Social Sciences said: “The unemployment rate will rise to 8 or even 9 percent. What we have now is only the government registered unemployment rate of city residents, it doesn’t include migrant workers”. Analysts believe at least 20-million migrant workers have already lost their jobs, with the closure of factories making goods primarily for export. But the Chinese slowdown is also hitting young graduates. Just a couple of years ago, they were snapped up for jobs as soon as they qualified. Now it is a different story, and salaries are going down. One student said: “Many graduates cannot find work. Most people make 350€ to 467€ a month to start off with, which is not a lot. The future looks grim.” And with the downturn, have come the mass protests, which are worrying the authorities. One group of redundant workers gathered from all over the country to demonstrate outside the headquarters of Chinese Bank of Industry and Commerce just over a week ago. Trying to keep a cap on the discontent, the government expects to double public expenditure, particularly on health-care, social security and unemployment protection. They hope to alleviate the financial burden on families, to improve their spending power and so boost growth.

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