China’s Premier Wen Jiabao has said he will maintain unprecedented government spending to drive a recovery from the slowest expansion in almost a decade.
In a speech at the World Economic Forum in Dalian in northeastern China, he said, “China’s economic rebound is unstable, unbalanced and not yet solid. We cannot and will not change the direction of our policies when the conditions aren’t appropriate.”
Wen’s remarks reflect a commitment last week from the world’s biggest nations to maintain unprecedented fiscal and monetary measures to secure a recovery from the deepest postwar recession.
“The worst has passed, now it’s about whether China can maintain the strong momentum of a recovery that’s primarily been driven by policy stimulus,” said Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong. “Very weak external demand is the key concern.”
It is widely accepted that the biggest danger is of the government’s money going, in the main, to the property market and creating yet another bubble.
Bloomberg reported investors in recent weeks indicated doubts that the recovery will be sustained as exports slide and the government seeks to rein in overcapacity in industries such as steel and cement.