December 15, 2008 Promotion of SMEs in Guangdong Province, “organized by Lingnan Commercial Road,” Forum, Bank of china (601,988, stock it) Cao Yuan Zheng, chief economist at International Holdings Limited (see above), Dr. noted that the most optimistic estimate is that the West will enter recession in two years, while the pessimistic estimate is that this crisis will last ten years. He expects the chinese economy next year will experience the most difficult year. Guangdong SMEs, only on technological progress, together with the entire industry cluster “Baotuan winter” can weather the crisis.

Cao Yuan Zheng said that China’s economic structure in the United States and to some extent the formation of “complementary cycle.” China’s “low cost” exports form a “surplus”, but these “surplus” of financial products through the re-”flow back” the United States, resulting in long-term U.S. interest rates further to stimulate the U.S. “debt” effect. Now the U.S. subprime mortgage finance real estate “bubble” burst led to the sharp decline in their physical needs of the economy, and now the arrangements for the cycle was “broke” the. Dependent on exports to the U.S. pressing China’s economic structural adjustment, the two sides complement each other to re-find the balance point of the economic structure.

On the financial crisis on China’s economy, Cao Yuan Zheng that the impact of China’s financial system is not great, but the impact on the real economy is much, much more complex. “The real winter may be just beginning, next year should be the most difficult year.”

Exports to China to combat the unprecedented

Cao Yuan Zheng said that the short term, the financial crisis on China’s economic structure, the greatest impact, given the change in orientation and the growth of domestic economy but also for some time, and is expected to be the most difficult year. He predicted China’s GDP growth next year may be 8%. If the adjustment well, there may be more than 8%.

Cao Yuan Zheng believes that the most optimistic estimate is that the West will enter recession in two years, while the pessimistic estimate is that this crisis will last ten years. In the current round of economic restructuring, China should use its three advantages. First, China’s international balance of payments in good condition, the Government have the ability to make the right adjustments on the economy. Second, China has 1.3 billion people, the government should promptly set up security system covering the whole of society people can really promote consumption. The current rate of savings of Chinese residents account for 60% of total GDP, so there is a great release of the consumer space. China is still in the process of industrialization and urbanization, railways and other infrastructure is still a huge space.

“The current financial crisis on the West against China’s export sector is unprecedented.” Cao Yuan Zheng said. Western financial crisis of shrinking markets have seriously affected China’s exports, because China relies heavily on exports to the U.S. in the past the United States, “Mao Yin food grain” of consumption patterns. With the U.S. dollar, the euro’s long-term depreciation of the RMB, China’s export sector, with greater pressure.

Sharp drop in the face of Western demands, Guangdong’s export-oriented SMEs have to make “adequate preparations for winter,” Cao Yuan Zheng said the majority of SMEs have to rely on technological progress, relying on independent intellectual property break a new path. Particularly in the SME financing, SME must proceed from the “supply chain” and “cluster” with regard to credit guarantee institutions. Cao Yuan Zheng pointed out that the current Western economic restructuring means that there have been “industry sector transfer” to the emerging countries, local governments and enterprises should pay close attention to these opportunities.