Brave the Economic Crisis with Confidence

“At this crucial moment, the most important thing of all is to restore and boost our confidence.”

C Premier Wen Jiabao, February 28, 2009

PREMIER Wen Jiabao spoke these words when answering a netizen’s question C one of the 29 posed to him C about how China could survive the rampant global financial crisis. On February 28, 2009, the premier chatted with the public online via the live broadcast channel of and . Most of the 29 questions concerned the world’s and China’s financial situation. The premier told them: “At this crucial moment, the most important thing of all is to restore and boost our confidence. Only equipped with confidence can consumers dare to spend and entrepreneurs dare to invest, can state leaders get creative and come up with timely and resolute countermeasures, and can our country have new hope.”

The Attitude

On several other occasions previously and later, Premier Wen stressed and reiterated the importance of confidence in overcoming the global economic crisis. On September 24, 2008, in New York, when meeting with the American economic and financial personages, including then President Timothy Geithner of the Federal Reserve Bank of New York and former Secretary of Treasury Robert Rubin, Premier Wen said, “In the face of the crisis, courage and confidence is more important than gold.” The Chinese premier has been giving pep talks from the very beginning of the financial crisis, reiterating on various occasions that to a certain extent it was a crisis of confidence as well as a credit crisis. Commentary from around the world recognized that the Chinese premier was trying to boost the spirits of the affected countries.

Late in 2008 and early in 2009, when inspecting Zhejiang, Shanghai and Jiangsu, Premier Wen repeated that confidence was an effective weapon in weathering the global economic turbulence. Premier Wen attended the World Economic Forum Annual Meeting in Davos on a “mission of confidence” in late January 2009 and visited four European countries. Again, on March 13, 2009, Wen told reporters at the annual sessions of the National People’s Congress and Chinese People’s Political Consultative Conference, “This year’s sessions have convened at a crucial moment in the international financial crisis…… We’ve proposed a package of countermeasures. To realize the plan, I think consolidating our confidence is still the foremost requirement. Confidence generates courage and strength with which we can overcome difficulties.”

The Actions

While calling for confidence, China also spoke against trade protectionism. At the same time, it actively expanded overseas procurement using action to show its determination to ride out the crisis side by side with the rest of the world. According to the Ministry of Commerce statistics, China organized 13 trade and investment promotion groups in 2009. They went to 33 countries, including Britain, France, Germany, Italy, U.S., Canada and Argentina, returning with an accumulative purchase value exceeding US $30 billion. One of the groups dispatched to Europe in early 2009 sealed a US $10 billion purchase and cooperation agreement with Germany alone. In an exchange of visits by state leaders in June and September, China and Russia concluded economic cooperation treaties amounting to a total value of more than US $8.5 billion. In October, China signed cooperation projects worth US $6.4 billion with the Association of Southeast Asian Nations (ASEAN).

Though the final statistics are pending, China’s imports from the United States in 2009 are expected to exceed US $ 1 trillion. According to statistics from Japan, its exports to China in the first half of 2009 topped for the first time its exports to the United States, an amount reaching 20.4 percent of the total Japanese export volume.

Meanwhile, China involved itself as best as it could in stabilizing the international financial system. During the G20 London Financial Summit in April, President Hu Jintao promised US $40 billion to the International Monetary Fund to boost its power and reach. On August 15, China signed an investment agreement with ASEAN, committing to providing loans totaling US $15 billion to its member countries, setting up a US $10 billion China-ASEAN investment cooperation fund, and offering RMB 270 million in special aid to its less developed member countries.

Domestically, the Chinese government took measures to stimulate consumption, following a proactive fiscal policy and an “appropriately relaxed” monetary policy in order to secure eight-percent economic growth. These moves were significant in calming the global economy and restoring the world’s confidence.

Following the 10 consumption expansion measures of 2008, the central government implemented industrial recovery plans for 10 manufacturing sectors.

Then Premier Wen Jiabao announced at the annual session of the National People’s Congress in March 2009 that China would carry out an investment plan totaling RMB four trillion before the end of 2010; its aim was to expand the domestic market, propel economic restructuring, transform growth modes, guarantee people’s livelihoods and employment, and sustain the country’s stability.

The world of 2009 saw and felt China’s confidence, with international opinions citing the effectiveness of China’s measures against the international economic crisis. The Financial Times pointed out that the Chinese premier injected confidence into Europe. The Spanish China Policy Observer commented: “Both the words and actions of the Chinese government have boosted the confidence of people at home and the international community. The Digest of Argentina spoke of China’s worldwide procurement: “While putting itself in good order, China has made contributions to the world.” The Guardian admitted that China had achieved concrete success at home and increased the hope of global economic recovery abroad. Nobel economics laureate Robert A. Mundell, remarked that China’s stimulus package was well designed and implemented and had triumphed domestically with encouraging international repercussions. President of the World Bank Robert B. Zoellick also agreed that China’s policies for tackling the economic crisis have been effective.