After the Olympic Games ,whether will  China encounter big troubles in economy? This question which was asked early in Japan and in Taiwan has been paid more attention to by European countries and America nowadays.  

The total investment scale of Beijing Olympic Games may be over 40 billion dollars which exceeds the whole investment of all host countries in the history of modern Olympic Games(108years).It’s no doubt that 40 billion dollars is a large number of money, but the average investment is just 10 billion dollars if the total number is scattered to four years.China's GDP is over 3.3 billion dollars,and the investment of Beijing is just 18% of the total investment the country.China's economy increase did not rely on the investment of Beijing Olympic Games,and it will not turn to a bad condition because of the lack of the investment of the Olympic Games.From the view of investment significance,the stadiums and hotel road have little to do with the China's economy,so the possibility of emerging quick decrease is little.

In fact, it seems that the risk of China’s economy has reduced. The people who has been to Shanghai may discover that there are metro projects everywhere, while the people who has been to Chongqing can notice that there are highway and bridge works everywhere. The provincial and municipal levels of government in China has recently finished the term changing . The new mayors and governors demand to go all out soon in economy, and coincidentally a new round of infrastructure investment has been launched. The central government has been still keeping the tight monetary policy in word. However, in February and March of this year, the amount of new loans has recovered to 250 billion RMB per month, which is roughly equal to the average month loans last year, but which is higher than the depressed level in the last 3 months of 2007(91billion per month). Even the new loans in April exceeds 460 billions, and the normalization of credit environment is the major factor to stimulate the restarting local infrastructure construction.

There must be a investment rebounding for the local government term changing of five years, and the same case occurred in 1993,1998(in spite of encountering the Asian financial storm),and 2003(despite suffering from SARS). The writer believes that the investment of infrastructure facilities must not be little in 2008. In fact, the local government’s activities of attracting investment has been speeding up since March.

It’s believed that China’s export is hard to avoid the influence from recession in America, and in the second half year, the development speed of the economy in Europe and in Japan also decrease. Actually these years China’s export enterprises have been deeply influenced by the speeding up of RMB appreciation, the increasing of worker’s wages and the skyrocketing of materials and energy price, while the reduction of export rebates and the tax integration system put last year has brought more serious running burden. The implement of Labor Contract Law this year strikes the labor-intensive enterprises and the labor-capital relation has been deteriorating, so there are serious challenges for export industry. The writer estimates that in Guangdong province, where the export amount is one third of the total export amount of China, one third of export industries will close up or move out within 3 years. This year the export increase of China may be only single-digit lever which is the first time since 2001.

However, he growth of domestic demand at least can partly counteract negative factors from export industries. Besides infrastructure construction ,China’s consuming increase is also speeding up. In the first quarter of this year, the increase of retailing consuming is next to 21%,which is he highest lever from 10 years ago.The consumption of service industry and agriculture department has been the two main forces during the whole personal consumption. Moreover, nowadays the debt ratio of the government has reduced to the lowest level since nearly 10 years. If needed, Beijing is capable of passing the fiscal expansion policy to resist to possible stall of economy increase. During the Asian financial storm, Zhu Rongji got through the hard time because of demand shortage by the Keynesian fiscal policy. The writer doesn’t believe that China’s economy will face the stall of increase after the Olympic Games.

After the Olympic Games ,there is little concern when the government put forward new policies, so we can’t think that there is no possibility for government to put forward policies which are carried out before the Olympic Games. However, the policies must have its purposefulness. From the macro-control to the real estate policy in Beijing, the writer believes that the government must consider international environment and the risk of domestic increase.

China’s stock market and house market is the weakest link of economy and is the most likely to be involved in an accident. From 2006 to 2007, stock market and house market skyrocketed, which undoubtedly expanded the possibility of slump in assets price. But, the continuous slump in stock market and house market during the last years, to some extent, give out the kinetic energy of the adjustment, and reduce the risk of farther slump. What deserves notice is that no matter stock market or house market. Recently, the observations of officials in Beijing has changed their views from making a pitch for them to take nonsense. At least in view of the policy, there is little possibility for Beijing to strongly swamp the stock price and house price.

Compared with stock market, the risk in house market must be greater. Since the fourth quarter, the selling of house takes a sudden turn for the funds discriminated by certain policy, the de draw their whole hopes all are faced with threat from the rupture of financial chain. The writer holds the estimation that many developers can get through the situation in the next 6 months. But macro-economy at a negative interest period, the liquidity of overflows, so other companies are willing to seize the opportunity to absorb land reserves. It is believed that developers who suffer from capital shortage can over ca financial difficulties by selling land while the house price will not reduce in a large scale.

After the Olympic Games, the biggest economic challenge China faces may not be the stall of increase, but the acceleration of inflation. The worst period of food inflation me be the first half year in 2008. with the disappearance of the snowstorm’s influence, and the improvement of statistic base number, the food price must fall. However, price easily rises, but hardly drops. So the price will not fall quickly, while the surge of international food prices will affect domestic food price and price expectations.

After the Olympic Games, the biggest concern comes from the rising income. In the seasonal report of the first quarter from listed companies, the acceleration of wage cost almost becomes the routine. Moreover, the problem of labor shortage is obviously transforming from manufacturing to service industry. The writer believes that under the intensification of inflation expectation, the increase of wage has been a general trend, and accordingly the possibility of emerging overall increase is rather great. Besides the high price of food, oil shortage and electronic shortage, some products (such as refrigerator and coca cola) which had never the price for more than 10 years star to rise price. It seems that they are using various ways to stimulate the rising of price.

It is not impossible that China will experience double-digit inflation in 2009. Although the writer think that this kind of development is temporary not the case that will be happen with the greatest possibility, the risk of emerging such case is increasing day buy day. It may be the biggest challenge China will face after the Olympic Games.

 

（本文原载于财讯月刊（台湾），为个人观点，并非投资建议或劝诱）