Liu He, deputy director of the Office of the Central Leading Group on Finance and Economy, said the need of the hour is to provide vocational training and education for the migrant workers. “This is not only about employment but also something that has severe social implications,” Liu said in an exclusive interview on March 20, 2009. He said if the problems of migrant workers are not solved well, the efforts to speed up economic development may be greatly weakened.

China has lately launched the 4-trillion-yuan stimulus package and 10 other programs to help industrial sectors to cope with the current financial crisis. According to a rough estimate, there have been nearly 20 million jobless workers since the crisis. Liu said China needs millions of skilled workers to translate the programs on paper into reality and hone the competitiveness of the industrial and manufacturing sectors. According to Liu He, the major problem for China has been an acute shortage of skilled workers.

Since many factories were shut down because of the current financial crisis, millions of workers, who used to make their living in the coastal factories which produce export goods, found themselves out of job. The biggest problem for many migrant workers is that they don’t have enough money to set up small businesses or to farm in their hometowns.

Liu warned that severe social problem will occur if we don’t take a serious view of the employment problem. Many migrant workers might find it hard to get their previous job since consumers across the world are spending less and trade protectionism is increasing in the meantime. Liu said the current employment pressure could be eased in the short term if the Chinese government is able to encourage some of the migrant workers to return to their hometown to start farming by providing them with subsidies and professional training.

Many factories in China are also in an embarrassing situation that they produce much more than the consumers’ demand. Liu said this makes it hard to open new factories and create more jobs.

Liu said we ought to find some strategic arrangements if we are to solve the migrant problem in the long run. He said the strategic arrangement should be centered on revising China’s industry and income distribution policy. The government should keep on to assist labor-intensive industries and to increase domestic consumption to create more jobs for migrant workers.

Furthermore, the urbanization rate of China is around 45% and every year about 230 million migrants are moving between cities and their rural homes. Migrant workers should be provided with urban household registration rights and the same social welfare as urban residents.

Premier Wen Jiabao said in his work report to the National People’s Congress in early March that the government would take quick measures to provide farmers and migrant workers with training as well as social security benefits.

In Liu’s opinion, the government’s goal of achieving 8% economic growth in 2009 depends largely on three aspects: global trade protectionism, job prospects for migrant workers and the severity of the financial crisis. He said these three problems are closely interrelated with each other.

Liu said Free trade is a gospel for the growth of both China and the rest of the world. He said many countries have agreed on free trade since the financial crisis unfolded, but in fact they focus on trade balance and usually encourage protectionism.

Although the worldwide recession has dominated globalization era, Liu said it is not beneficial to strive for a single country-based trade balance or even trade surplus. According to Liu, such a scenario would be retrogressive for global development and also have negative effects in rebuilding a new international financial order.

Liu said some countries are far too busy with stimulus packages instead of making efforts to analyze the causes and lessons of the financial crisis. He warned that the crisis might be followed by a global inflation of prices, the same as the Great Depression from 1929 to 1933.

Liu said most of the developed countries are lacking in new growth policies often needed to spur the real economy. He said there might be no effective global partnership in the coming decade, and the potential risks of ups and downs also exist. In this case, we should be prepared for the financial crisis to last longer than what we have expected.

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China’s railway builders and train manufacturers, too, are celebrating their unexpected fruits following the government’s commitment to enlarge the rail infrastructure across the country. Companies in these sectors are expected to be the major beneficiaries of the 4 trillion yuan stimulus package lately announced by the government as its key policy in ensuring China’s economy continues to thrive, despite the situation of the global financial downturn.

The first fruits of this massive investment initiative might be the delivery of 100 new high-speed trains as part of a deal between the Beijing Railway Administration and China CNR Co Ltd.

Zhang Shuguang, chief of the transportation department of the Ministry of Railways, said these new trains, which have a cruising speed of 350km per hour but are capable to reach a top speed of over 400km per hour, represent an investment of 39.2 billion yuan. Zhang said they will be introduced on the Beijing-Shanghai line in 2011. According to Zhang, the ministry is already planning to invest in more China-made high-speed trains later in 2009, and will introduce them on a number of other lines across the country.

China has already earmarked 600 billion yuan for railway investment in 2009, a 100% increase versus 2008. Even this, though, is dwarfed by the 3.5 trillion yuan to be injected into the network over the next three years. This giant investment plan will see the country’s railway network expanded to 120,000km by 2020.

At the Railway Transportation Equipment Manufacturing Industrial Park in Changchun, China’s rail manufacturing hub, celebrations over the stimulus package have been particularly hearty. More colloquially known as “Rail Park”, this joint venture, between CNR and the Changchun municipal government, is now in progress to be a global leader in rail technology within the following three years.

The cooperation between CNR and Changchun is greatly mutually beneficial. With CNR now based in Changchun, the capital of the northeastern Jilin province, rail manufacturing is now being established as one of Changchun’s key industries. CNR was the obvious partner for Changchun since it looked to becoming China’s key rail manufacturing city.

CNR already has an admirable record of success stories in rail manufacturing prior to the signing of the deal. Over the last 50 years, it has pioneered China’s first magnetic suspension passenger train, delivered the first model-A aluminum alloy train for urban rail transit use, as well as the first stainless steel urban rail transit vehicles. In 2008, the company won an order for 60 subway trains for Shenzhen, 40 light rail trains for Changchun and 455 subway trains and 160 double-deck buses for export to the Middle East.

With more than 40 years of experience in providing trains for the Beijing underground network, its remarkable expertise was recognized in 2008 with an order from the MRT Corporation to provide 10 sets of rolling stock for the Hong Kong subway.

This growing market demand saw CNR’s need for rapid expansion conforms perfectly to Changchun’s ambitions in the railway sector. Their joint venture has an annual turnover of 30 billion yuan at present and is expected to reach 50 billion yuan after the government announced its investment plan.

Up till now, over 30 major companies have moved to the Rail Park, bringing a total investment of more than 1 billion yuan. Plans are already underway to expand the existing 6.5 sq km park—with a 10 sq km zone, immediately to the north of the existing facility, already earmarked for this possibility.

New production facilities are expected to come out in August 2009 to deliver on the government’s demand for increased rolling stock. The first of the new carriages and engines are expected for delivery in June 2010.

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The conference which began in Beijing on Monday will come to an end today. The three-day event is expected to how more details on how the government will use fiscal and monetary measures to support employment and domestic demand, while reducing excessive dependence on exports.

According to Song Hong, a researcher with the Chinese Academy of Social Science (CASS), the meeting will announce the detailed measures for the goal of economic growth in 2009, the minimum required to control the unemployment situation.

Song was one of the two economists who attended a Nov 28 meeting with top Party officials to discuss economic priorities for 2009.

The nation’s economic growth dropped to 9% in the third quarter, and the situation may be worse because of the global crisis, the World Bank forecast earlier.

Such growth is absolutely not enough for China, because the nation needs to create 10 million jobs for fresh job seekers each year. Over the past months, the bankrupt of a number of factories in the costal export bases have caused layoffs of hundreds of thousands of migrant workers.

The government has to announce several stimulus packages and cut interest rates to spur domestic demand in the bleak situation.

It is said that the government may express how and where to use the stimulus package in detail at the conference.

The package could bolster annual GDP growth by 1% point by 2010, Zhang Ping, minister of the National Development and Reform Commission said earlier. Based on the data, 1% growth could create about 1million jobs.

Song forecasted that the policy makers may continue to the ongoing stimulus measures, because the $586 package is not enough in the worsening world economy.

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Also, the three policy banks will get 100 billion yuan ($14.6 billion) from the government to prop up economic growth during the worsening global financial crisis.

When chairing an executive meeting of the State Council, or the Cabinet, Premier Wen Jiabao also said they will take steps to help economy over the crisis.

The meeting said that banks, securities firms and insurers should take coordinated action to do more in supporting economic growth and contributing to industrial restructuring.

It is urgent to implement a “pro-active fiscal policy” and “a moderately easy monetary policy” in the global financial crisis; and the financial sector should play a far more important role in economic development, said the meeting.

Four measures below are among the nine which were announced to boost the role of the financial sector in the economy.

• Urge commercial banks to meet the demand for loans from severely hurted SMEs, investors in the countryside as well as home and car buyers.

• Expand the issue of treasury bonds.

• Allow insurance companies to invest in major infrastructure projects.

• Use exchange and interest rates and the bank reserve requirement ratio to ensure liquidity in the banking system.

Analysts believe the move is part of the government’s answer to how the stimulus package, which was announced on Nov 9, will be financed.

The central government said last month it would provide 1.18 trillion yuan, or 30 percent, while the rest will be made up by local governments and enterprises.

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Because of the moves of stimulating investment and consumption, it is believed that the GDP growth could get 9% next year—with 70% possibility.

Wang Tongsan, a senior economist also holds the same opinion, he said the growth might be higher.

According to the economic forecast research team, the growth rate in economy next year will be 9.3%, which is higher than those made by international organizations.

The World Bank said last month that although they expect China can have 9.4% growth this year, China’s growth may slow to 7.5% next year, the lowest since 1990, as the global financial crisis would affect more on economy in 2009.

The whole world is paying attention to China’s next year’s growth. An Organization of Economic Cooperation and Development report said China’s growth next year could be 8%, while the International Monetary Fund put it at 8.5%.

Chinese Academy of Social Sciences (CASS)’s Wang said the stimulus package and moves from government will make next year different. They believe the policies to spur domestic demand will work well and bring impressive effect.

Local government have promised to follow the central government’s steps to give a hand helping stop the national economy from sliding further after it registered an annualized 9% growth in the third quarter of this year.

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The benchmark Shanghai Composite Index and Shenzhen Component Index both soared several percent especially Shanghai Composite Index had 884 stocks closing higher.

The amount of the combined turnover on the two bourses was 120.35 billion yuan, which decreased 16.7% from Tuesday.

According to analysts, they have expected the turnaround would appear because of the short-term pressure by the huge stimulus package. The mainland’s major index shed 6.31 percent on Tuesday due to growing concern about the global economy.

Mao Nan, an analyst at Orient Securities Co Ltd. said that owe to the government’s recent bold fiscal move, the market confidence has fundamentally grown and there are still much space for index to get further advancement.

The accounts of China’s newly opened stock investment soared 55% to 261,846 in the week ended Nov 14 from the previous week.

The stock market can reflect the country’s economy, which will definitely be stimulate by government’s policy to boost domestic demand, Mao estimated that the interest rate cut would be carried out in near future.

Based on vice-president of Asia-Pacific equity research for Standard & Poor’s, Lorraine Tan’s opinion, although mainland stocks cannot be separated completely from overseas markets, the selling pressure here is much greater than in other markets due to the sharp fall in the past 10 months. “The Shanghai index was down 67 percent by October, and probably has to consolidate.”

Shares in Chinese oil refiners restarted amid speculation that China would reform the fuel price, which would better refiner’s margins. Sinopec surged to its daily limit to 8.37 yuan several days ago, while rival PetroChina jumped 7.49% to finish at 11.91 yuan.

All shares in the financial sector gained in Nov 20th’s session. But Tan noted that the bad news still existed in the process of economic front, and the stock market would stay fluctuant. “We expect more details of China’s stimulus package to come out, and a better performance will probably be seen in the second half of next year.”

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The urban construction and communications bureau announced last week plans to spend 500 billion yuan on a large scale of infrastructure projects, such as the improvement of affordable and low-rent housing, building projects in the suburbs, constructing an international shipping centre and investment in urban transportation facilities.

In addition, a series of measures were announced to expand financing for small and innovative companies. Sun Lijian, a professor of Fudan University said, “The measures, along with the billions of yuan being committed, are in response to the central government’s latest moves to stimulate domestic demand.”

According to Chen Xiao, a professor from Shanghai Jiao Tong University, the 500-billion-yuan investment will speed up the reconstruction projects. He said, other delayed investment projects caused by the shortage of funding may also be activated through the investment package.

He still said the real effects of the stimulus plan would be determined by the criteria for the selection of projects. Under such circumstance, the investment will be put into areas where are in need of money.

Compared with the first half of the previous years, the growth rate of the city fell to 10.3 percent, down 2.7 percentage points. The next two months and the first half of 2009 will be “tough”, the mayor said, to sustain the smooth development and keep the livelihood of the citizens will be the city’s priority and they will take every effective measure to achieve the goal.

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During a press conference organized by the State Council Information Office, vice-director of the National Development and Reform Commission (NDRC), Mu Hong said that the 4 trillion yuan would only be part of the country’s total investment and the central government would provide 1.18 trillion yuan for the package.

The total spending of investment from which including businesses and local government will reach 4 trillion yuan by the end of 2010. But Mu conjectured that investment from across society could be even higher.

Though local governments are not allowed using bond issues to raise capital, the central government is considering permitting them to change it into loan transfers or appropriate channels or measures with central approval so that capital can be raised, Mu said.

Vice minister of Finance Wang Jun said all types of capital, including private equity are welcomed to do help keep the economy stable.

This was the first time the government had revealed details about its spending plans.

Drastic measures were essential as the external economic environment “posed a severe challenge” for China to maintain growth, Mu said, the slowdown of China’s economy is being more and more distinct, especially after September. From the first quarter to the third quarter, the growth rate of China’s domestic product has reduced from 10.6 percent to 9 percent.

The strong evidence of a slowdown is that the growth rate of October’s industrial value-added output dropped to a seven year low of 8.2 percent. China’s productivity would be heavily damaged if the slowdown accelerated, according to Mu, so the Chinese government urgently decided to change policies in macro-economy and launched the 4 trillion yuan stimulus package.

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United States: The global crisis was brought about by the housing market collapse of this country which has earmarked $700 billion for bank funding. It is expected that Barack Obama would spend hundreds of billions of dollars more in a fiscal stimulus package once he assumes office next year.

United Kingdom: The country has carried out a 500-billion-pound rescue plan to help the banking sector. The government will make extra capital available to eight of the country’s largest banks and building societies in exchange to let them enjoy priority in shares or equity.

Germany: Has decided to allocate 500 billion euros to be liquidity or lending guarantees and 80 billion euros as state funds for bank recapitalization. The government has announced an unlimited guarantee on all retail deposits in the country’s banks.

France: Has carried out a plan to keep its financial sector stable. The liquidity and lending guarantees in this plan are up to 320 billion euros and bank recapitalization up to 40 billion euros.

Japan: Has commenced urgent steps which include to inject public funds into regional banks and to stabilize its financial market. The government is mulling measures to temporarily suspend sales of stocks held by government entities and reduce the restrictions on corporation’s purchasing of their own shares, as well as an expansion of disclosure rules on short-selling.

South Korea: Has taken a $130-billion rescue package, including sate guarantee on foreign debts and promises to recapitalize financial firms.

Australia: An urgent A$10.4-billion stimulus package has been announced to deliver cash payments to pensioners and low- and middle-income people and to offer A$1.5 billion to help people when they buy their first homes.

India: The country’s plan is taking the steps as follows: to restore the duty drawback to 11 percent; requisition to fix interest rate at 6 percent for packing credit; the repayment‘s interest of term loan can be delayed by two years; compensation to state levies and transaction cost and duty free procurement of diesel.

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The Nov 5 statement marked an end to the previous prudent policy because of the increasing risk of slowing down further. According to Zhang Xiaojing, an economist with the Chinese Academy of Sciences, said it is the right choice fro the economy.

The economic growth of the nation has been slowing for five consecutive quarters. It dipped to 9 percent in the third quarter which is the first time for the growth rate below double digits. What is worse, because a rebound in overseas demand in uncertain and consumption is continuing to shrink, worries over such slowdown have been rising recently.

The central bank governor Zhou Xiaochuan said the economic slowdown could further over the weekend. It would drop between 8 and 9 percent in 2009 from 9.9 percent in the first three quarters. On Friday, the International Monetary Fund (IMF) reduced its 2009 forecast down 0.8 percent point to 2.2 percent from its October projection.

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