China will be the first major economy to come off the bottom with sequential growth moving into positive territory as early as the first or second quarter of this year

摘要

China's policy response to the global economic crisis is the gold standard. The response is large, timely, and well-designed. It includes monetary easing, which is actually working; a substantial increase in infrastructure invest-rnment; and dramatic increases in government spending on social programs, including stepped-up transfer payments, pensions, and a major broadening in health insurance coverage. This policy response, combined with the fact that Chinese households and financial institutions do not need to delever-age, suggests that China will be the first major economy to come off the bottom with sequential growth moving into positive territory as early as the first or second quarter of this year. And the government's very modest domestic debt means that China could converge back toward its long-term growth potential of 9-10 percent more rapidly than other countries where medium-term fiscal sustainability will be an issue.rnThe risks to this forecast are twofold. First, a deepening domestic property price correction cannot be ruled out, despite government efforts specifically focused on reviving the housing market.