China seeing 'gradual recovery'

BBC News

China's economy is showing some signs of recovery from the global financial crisis, the country's Prime Minister Wen Jiabao has said.

The economy is showing "positive changes" but still faces "very big difficulties", he said on the sidelines of Thailand's cancelled Asean summit.

China has already implemented a 4tn yuan ($585bn;£399bn) stimulus package to boost economic activity.

Mr Wen also said he would spend more if necessary to boost the economy.

Despite its problems, China's economy - the third biggest in the world - is forecast to grow by at least 5% this year, in stark contrast to many major global economies that are shrinking.

'Glimmers of hope'

The economy showed "better than expected positive changes in the first quarter," Mr Wen said.

Citing improved investment, consumption and trade figures, he said that some sectors of the economy "are in the process of gradual recovery".

He added that while the global crisis was deepening, China had perhaps seen the worst of it.

"As the crisis has not touched its bottom, we can hardly say that the Chinese economy alone has got out of the crisis."

But he explained that China was prepared to implement further measures to ensure that the economy continued to stabilise: "What we should do is exert our utmost efforts to minimise the effects of the crisis."

Mr Wen's comments come just days after President Barack Obama said he saw "glimmers of hope" in the US economy.

On Sunday, the People's Bank of China, the country's central bank, also said it would ensure the financial system has sufficient liquidity for economic development.

Plunging exports

Earlier this month, figures showed that China's manufacturing sector grew in March for the first time in six months.

The purchasing managers index from the state-sanctioned China Federation of Logistics and Purchasing rose to 52.4 from February's figure of 49.

Any figure above 50 indicates an expansion in the manufacturing sector.

Manufacturing accounts for about 40% of China's economy and has been hit hard by falling demand for its goods in recession-hit western economies.

In fact, Chinese exports plunged by more than a quarter in February from a year ago.

Exports dropped by 25.7% to $64.9bn (£47.3bn) compared with the same month a year earlier.

Ambitious targets

In the final three months of last year, China's economy expanded by 6.8% from a year earlier - below the 8% that officials view as the level needed to keep unemployment in check and avoid social unrest.

Overall growth in 2008 stood at 9% - the first time since 2002 that the economy has expanded at a single-digit pace.

Mr Wen has announced a target of 8% growth for China's economy in 2009, but many analysts believe the figure will be closer to 5%.

In fact, his comments on positive signs of recovery do not chime with the views of some analysts, who believe China will continue to struggle during the global economic slowdown.