BEIJING -- The Chinese economy was set to grow healthily and steadily after the summer Olympic Games and a post-Olmypic economic downturn was highly unlikely, a noted Chinese economist said Tuesday.
Fan Gang |
"Personally I feel very optimistic that the Chinese economy after the Beijing Olympics will continue to grow rapidly and healthily.... I am full of confidence over the economy after the Olympics," said Fan Gang, director of the National Economic Research Institute at the China Reform Foundation.
He told the Beijing Forum on the Olympic Economy that the Chinese economy would probably not be subject to further adjustment and micro-economic control after the Olympics because China had been doing the job since the end of 2007.
Over the past several months, the Chinese government had taken a series of micro-economic control measures to cool down the economy, which was seen by many economists as overheated.
"Our growth rate has dropped, exports decreased and the foreign trade surplus has declined. We cooled down the stock market and real estate market," Fan said, adding that the adjustment period was drawing towards an end since the government had taken many measures.
"Such adjustment and micro-economic control measures certainly reduce possibilities of a post-Olympic downturn," said Fan, who was also a member of the Monetary Policy Committee under the People's Bank of China, the central bank.
He also said Beijing's investment to build sports venues and other infrastructure, though worth billions of dollars, accounted for a mere three percent of the country's total investment in fixed assets.
"China is a big country. Beijing is small.... Even if Beijing's investment in infrastructure drop sharply after the Games, it would not have a significant impact on the whole economy," he said.
An athletes runs next to the National Stadium or the Bird Next in Beijing in this April 20 file photo. [Xinhua] |
Fan also said it was unlikely that Beijing would slash fixed assets investment since the city was still at the early stage of economic development and its appetite for infrastructure would still be huge after the Olympics.
"The fact is, over the past several years, Beijing has been forced to reduce some other infrastructure projects in order to concentrate on the construction of sports venues," he said.
History has shown that some countries were plagued by a post-Olympic economic downturn, or called "Valley Effect" or "V-low Effect".
The phenomenon was mainly caused by a dramatic investment increase at the pre-Olympic stage, accompanied by a boom in consumption and revenues. But the investment and consumption plunged following the Olympics while the host city would have to shoulder the heavy burden of maintaining idle sports venues.
Fan, however, cautioned that the Chinese economy might still face new challenges, domestically and globally, and needed further policy adjustment in September or October or even later this year.
"China is economically a developing country under transition. The economy has its own problems," he said.
On the other side, he said the Chinese economy would face a new international economic situation -- the U.S. credit crisis was still far from over and its negative impact was still coming out and prices for oil and grain were continuing to rise on the international market.
"But these have nothing to do with the Olympic Games.... Hosting of the Games will push forward economic development in China by helping restructure industries and integrate the Chinese economy into the global market," he added.
