Chua Chin Hon, Straits Times 5 Feb 08;
Bank's report cites strong fundamentals; Chinese experts say crisis could even stimulate economy
BEIJING - THE devastating snow storms that have hit China will not cause long-term economic damage, the World Bank said yesterday, citing strong fundamentals and growing consumption in the mainland.
Beijing also has an array of policy options at its disposal should there be a need to pump up the economy, such as by relaxing fiscal policy or lifting credit curbs.
Some Chinese economists went further by suggesting that the crisis might actually stimulate the economy as China poured investments into repairing the damaged power grid and improving the infrastructural network.
'The global outlook has weakened and is uncertain, but China is likely to grow robustly and is well-positioned to stimulate demand if needed,' the World Bank said in its latest quarterly report on China released yesterday.
The report scaled back the World Bank's forecast for Chinese growth to 9.6 per cent - the slowest pace since 2002 - down from the 10.8 per cent it projected last September.
But slowing export growth was identified as the main damper on China's economy, rather than any lasting impact from the snow storms.
The bank's senior economist Louis Kuijs said the economic fallout from the storms should be 'temporary', and that recovery should pick up once the weather improves.
China's round-the-clock efforts to combat the prolonged weather crisis are at a critical stage this week, as stranded migrant workers and families without electricity look to the government to restore the paralysed transportation and power networks in time for Chinese New Year festivities, which begin on Thursday.
Beijing scored an important psychological victory in this regard yesterday when it successfully reopened the main north-south Beijing-Zhuhai Highway, which had been locked down in recent weeks by the country's worst winter weather in 50 years.
This raised hopes that millions of migrant workers waiting anxiously to be reunited with their families could get home in time, and that food and energy supplies could reach hard-hit regions faster.
Another boost came in the form of a spectacular 8.13 per cent surge in the Chinese bourse yesterday, its biggest one-day gain in 2-1/2 years.
The stock market was cheered by news over the weekend that financial regulators have approved two new stock funds, and by assurances from Mr Li Rongrong, the top official in charge of Chinese state-owned companies, that the overall performance of listed companies would not be affected by the storms.
But the winter crisis is not yet over. Heavy fog and a new round of snow, rain and sleet blanketed parts of central, southern and eastern China yesterday.
Dozens of flights were grounded as the authorities were forced to close expressways in parts of Zhejiang, Hunan, Anhui, Jiangxi and Jiangsu provinces in the east.
The affected regions, however, can expect a brief respite during the first three days of Chinese New Year when 'fine weather will dominate', meteorological chief Zheng Guoguang told reporters yesterday.
He attributed the recent storms to an unusually strong cold front moving in from north-west China and the La Nina, a cyclical global weather pattern blamed for a series of devastating hurricanes and floods last year.
However, he steered clear of any suggestion that China's breakneck pace of urbanisation and economic development might have contributed to the extreme weather. He also said that there was no way to predict if the same problem would return next year.
'But we have learnt an important lesson, and that is we must be prepared,' he said.
