With the U.S., Japan and all of Europe mired in the worst global recession in 30 years, China has shown a restorative strength that six months ago many doubted it had. The government´s $586 billion stimulus efforts — and in particular the flood of credit unleashed by the Central Bank last November — are beginning to have an impact-about 13% of GDP, spread over two years - China has snapped back from the swampland. The economy grew 7.9% in the second quarter and will now probably expand 8% or more this year. Retail sales are still growing at a robust 16% annual rate. The Purchasing Managers Index, an indicator of the health of the manufacturing sector, rebounded into positive territory in March after falling for months, indicating that industrial output may be expanding again. Home sales are also showing signs of recovery, as is lending. Even the stock market, which had plunged by some two-thirds from its peak in 2007, has clawed back 25% in the last few months. Evidence of increasing momentum appears almost every day. Factory production has begun to edge up, in part because Chinese consumers continue to spend money at a healthy pace.

Despite all restorative signs from the recession, whether China is truly recovering remains a question."Although the country´s economy began to rebound recently, the economy is not on a solid footing and faces uncertainties both from home and abroad,"said Yao jingyuan, Chief Economist with the National Bureau of Statistics. To further lift the country´s economy, Chinese President Hu Jintao and Premier Wen Jiabao on July 23 called for efforts to stick to the government´s proactive fiscal policy and moderately easy monetary policy to sustain the economic growthas the country´s economy is at a critical moment and the foundation for recovery is not solid.Hu said the Chinese economy is generally improving because of the stimulus packages the Chinese government rolled out to weather the global economic downturn, but caution against risks should be strengthened.

Source: China Textile Leader