China's anti-crisis program: positive and negative results
In November 2008, the Chinese Government decided to allocate a financial package of $ 4 trillion RMB ($ 586 billion) to stimulate the national economy in the period 2008-2010. Adoption stimulation package, primarily designed to improve the domestic economic situation in the country by improving the capacity of the Chinese market, increasing domestic demand, improving the population's purchasing power, infrastructure development, reduce the tax policy, social support and job creation.
The results of China's anti-crisis program can be judged by the main macroeconomic indicators which demonstrates the Chinese economy this year. Since the beginning of 2009 is observed positive dynamics of GDP growth. In I quarter this figure was at 6.1%, in II quarter growth rate increased to 7.9%. In III quarter, according to preliminary estimates of experts of the Research Institute for Industry at the China Academy of Social Sciences the gross domestic product will grow by 11-12%, according to the estimates of Merrill Lynch – by 9.2%.
Another sign of the effectiveness of anti-crisis measures is the acceleration pace of industrial growth in China, which is observed the fourth month in a row. For example, industrial output rose in July to 10.8% in August – by 12.3% in annual comparison. Retail sales in July increased by 15.2% and in August – by 15.4%. The volume of lending also rose - from 355.9 billion RMB ($ 52 billion) in July to 410.4 billion RMB ($ 60 billion) in August. In general, in the first half against the backdrop of a record volume of lending for the period totaled $ 1.1 trillion. The volume of capital investment by Chinese companies has increased by 33.5%. China – one of the few countries in the world since the beginning of the global financial crisis, lending has increased.
Reserves of the country also increased substantially. In I quarter gains totaled $ 7.7 billion, in II quarter gold reserves grew by $ 177.9 billion to $ 2.13 trillion. It is projected that in 2009, their volume will exceed $ 2.2 trillion.
However, the situation in China's foreign trade still leaves much to be desired. China's trade surplus in August, although increased from July's $ 10.6 billion to $ 15.7 billion (expected to increase only to $ 12.9 billion), compared to August 2008 was 45% less. The volume of exports in August fell by 23% in annual comparison. Nevertheless, for the sake of fairness it should be noted that this did not prevent China in the first half of 2009 come out on top exporter, ahead of Germany. According to the WTO, during this period, China had brought goods worth $ 521.7 billion, while Germany's exports reached only $ 521.6 billion.
Another positive result of anti-crisis program of China is to implement large-scale infrastructure projects, particularly in the field of transport communications, energy and housing. In early 2009, China commissioned 191,000 houses economy class and 295,000 more are being built at present. Renovated more than 110,000 private homes. Provide drinking water for 5 million rural residents, marsh gas – 1.51 million rural households. Full construction of rural roads, electricity, accelerate the implementation of the project for water diversion southern rivers to the north. Completed construction of 120 large-scale irrigation. Cleaned 65 large and medium reservoirs. Reconstructed water 40 large irrigated areas. Also increased the pace of railway construction Harbin - Dalian, Wuhan - Guangzhou, Nanning - Guangzhou, Guiyang - Guangzhou, a number of highways. Construct airports total area of 80,000 square meters. In addition, built a huge number of hospitals, schools, vocational schools, cultural centers.
Observed progress in the field of social welfare and raising living standards. For example, the income of urban residents increased by 11.2%, taking into account the price factor, and the welfare of the village increased by 8.6%. Pension security also improved. If in 2007 the amount of pensions was about 900 RMB, by the end of this year this figure rises to 1200 RMB. In addition, pensions are indexed in line with rising prices and a change in bank rate on deposits. As part of standard of living of the poor support provided to people affected by natural disasters, and it is about 40 million people. In particular, in Sichuan issued a three-month allowance at the rate of 15 kg of grain and 300 RMB per person per month.
It is noteworthy that, despite the positive overall economic performance, the Chinese government considers the country's economic recovery still not stable. In particular, the report entitled "Summer report about the development of industry in 2009," experts point to the fact that the trend of development can not be called until stable. In this regard, Premier Wen Jiabao said that China does not plan to fold stimulate the economy measures.
One group of experts believes that the uncertainty in the field of foreign trade, yet not allows you to speak about sustainable recovery in GDP growth in China. The reduction in export volumes causes the appearance of excess capacity in many industries. Another group of experts pointed out that, despite the reduction in exports from China, the rise of the Chinese economy, the pace of which look impressive in comparison with the rest of the world.
According to the head of the Center for Economic and Social Research Institute of China, deputy director of the Institute of Far Eastern Studies Ostrovsky, the positive results of China's economy is mainly associated with the right anti-crisis policy of the country, aimed at developing the domestic market and demand of the population in an unfavorable global economic conditions. Thus the main disadvantage of anti-crisis program in China is rampant lending to state enterprises, which are primarily used for benefits. In particular, he notes that if this is good for the development of infrastructure, it is bad for the development of a number of industries.
However, despite the fact that China has quite successfully passed the most acute phase of the economic crisis, the country faced a number of equally important tasks. First and foremost is the problem of unemployment, which remains at a high level. According to various estimates, the number of unemployed in China exceeded 20 million. Government policies do not yet allow fully implement the plan to create new jobs. This trend, respectively, exacerbates social tensions throughout the country.
In addition, the priority is the need to gradually reduce the program to stimulate the economy by the state while maintaining sustainable economic growth. Continuous infusion of big money, accompanied by increased money supply, putting strong pressure on the economy in the form of higher inflation. The Chinese economy should gradually move to increase due to natural investment from business, consumer spending - without substantial assistance from the state.
Undoubtedly, the bailout package has provided a unique opportunity for the development of many industries in China: cement, steel, automobile, petrochemical, light industry, construction and transport, non-ferrous metallurgy, production of household appliances, environmental protection and environmental safety. Deserves special attention advances in automobile industry. Providing tax incentives for the purchase of cars has led to a significant increase in their sales in the country, resulting in a background of problems of the world automobile industry, China has become the largest car market in the world.

Miracle of the Chinese automobile industry
Global economic and financial crisis struck in almost all sectors of the global economy, however, particularly hard hit auto industry. Because of the sharp decline in sales volumes leading automobile companies in the world, especially in the United States, were faced with bankruptcy. However, against this background the situation in China is completely opposite. Chinese car market, being the second largest in the world after the United States, continues to grow despite the crisis. Thus, from January to August this year in China sold more than 8 million new vehicles, which is 14-15% higher than the same period in 2008. In July, China had sold 1.86 million cars, which is 63.6% higher than in the same month last year. The number of produced cars is 1.11 million units, which is 52.2% more than in the corresponding period last year. This phenomenon resonates among economists, most of which comes to a conclusion about the effectiveness of economic policy in Beijing as part of anti-crisis program.
The progressive development of the Chinese automobile industry during the world crisis, primarily due to the presence of a huge domestic market. In addition to this, under the anti-crisis measures, the PRC government stimulates the purchasing power of the local population by providing unprecedented benefits and credits. Relatively low gasoline prices in China also have a positive impact on potential car buyers.
According to the head of economic-advisory department of the State Information Center Xu Changming, currently China accounted for about 10% of world consumption of automobiles. Growth of the Chinese automobile industry recorded mainly due to the growth of car production, while improving the competitiveness of its own brands, which, in particular, constitute more than 55% of products on the market classes of AOO and AO.
Deputy Managing Director of the American auto company Ford in China, K.Dawei predicts that by 2015 the share of China will account for 40% growth of the global automobile industry. According to the forecast, the growth rate of production and sales of automobiles in China is 10% per year, and in 2010 this figure will reach 11-12 million units. For comparison, in 2005, China sold a total of 2.79 million cars.
Another remarkable point is the development and introduction of new models of cars in China, while in other automobile super-powers against the background of the crisis, such opportunities are severely limited. Thus, according to the Xinhua for the first 6 months of 2009 in China was put into production 89 new cars, where the 73 passenger cars, 9 jeeps and 7 minivans. Moreover, until the end of the year on the conveyor will stand about 50 cars. Total in 2009 in China life will find about 140 new models. Despite the fact that about 1/3 running on production machines are not 100% owned by the Chinese, and various joint ventures, however, such indicators can not boast the rest of the world. For example, over the past six months in the United States, Europe, Japan and Korea have come to the assembly line just a few of new models of cars.

It is noteworthy that only 15-20 years ago, China's automobile industry was in its infancy and produced exclusively licensing model. Important stage in the development of Chinese automobile industry has become a mass arrival of the world's automakers in the domestic market. In the late 90-s of the last century, the PRC government has made a bet on the development of the licensed assembly of models of leading foreign companies. Were established prohibitive customs duties on imports of cars, and all joint ventures were established with the indispensable participation of the state and receive tax benefits.
Given the low salaries and high prospects for the Chinese market (in a country with a population of over 1.3 billion issued not more than 500,000 cars per year), such policies have led to the fact that almost all Japanese, European and American manufacturers have opened factories in China. Access to global technology has led to the development opportunities of own production, and in recent years China has independently develop and produce cars.

Active government support through tax incentives, public investment has meant that China just a few years came close to the three largest automakers in the world.
The last step in the rank of automobile power - access to the international market and promote their products on world arena. While domestic demand in China is constrained by the relatively low purchasing power, especially in rural areas, so the export orientation - the natural way of development of Chinese automobile industry.
After China's entry into WTO export cars from PRC grew by 30% per year, and last year in the auto trade surplus was observed increased as the concentration of car manufacturers.
If in 2005 China exported more than 170,000 vehicles (including complete sets of spare parts), then in 2008 the figure was 644,000 cars worth $ 8.88 billion in 2009. However, because of the deepening economic crisis and a significant reduction in demand for cars in the world, as well as the introduction in many countries the protectionist measures, exports of Chinese cars declined. In the first quarter of 2009 the decline amounted to about 60%.
Despite this, Chinese automakers have no problems with sales because of huge demand for automobiles in local market. The decline in export volumes offset by a capacious domestic market consumption, where the purchasing power of the population is stimulated by anti-crisis measures of the government of the PRC. In the first quarter demand for new vehicles in China rose by 34%. For comparison, in March China has sold about 1.11 million vehicles, while the Russians for the same period bought slightly less than 0.14 million cars.
An important trend of Chinese cars trade is to reduce the share of imports and increasing exports. In 2005, the number of export cars for the first time exceeded that of imports. However, the ratio of the quantity and value for exports of Chinese cars behind imports. In this regard, according to Deputy Minister of Commerce Wei Jianguo, China going in the next 10 years to increase the value of exports of automobiles and their spare parts up to $ 120 billion.
One of the most promising foreign markets for Chinese cars is Russia and other CIS countries. This is due to the fact that European and American markets are difficult for China because of the high standards of quality, safety and environmental standards. The attractiveness of Russia's market is that it is relatively huge and developing, while population has different low-income. In these circumstances, the Chinese cars seem more affordable for Russia's consumers, rather than European, American, Japanese and Korean counterparts.
It should be noted that Chinese automakers massive offensive in Russia poses a serious threat to the development of its own automobile industry. If Russia’s domestic brands are able to compete by price with the representatives of European, American, Japanese and even Korean brands, but the Chinese cars do not provide such an opportunity.
In Russia, rapidly growing dealer network on the selling of Chinese cars. Despite the traditionally cautious attitude to the products marked ”Made in China” China's automobile dealers are predicting a quick redistribution in Russia's car market. In recent years, the Chinese have made several attempts to run their own assembly plants in Russia - Novosibirsk, Kaliningrad, Moscow and Tatarstan. But their plans are still hampered by the efforts of lobbyists from the domestic automobile industry and bureaucracy. However, experts believe that sooner or later the Chinese gets its way and become a full member of Russia's market.
These assumptions are based on a broader understanding of the prospects for Russia-China cooperation in the spirit of strategic partnership. Mutual interest of Moscow and Beijing to the maintenance of traditionally friendly relations is too important to expose the cooperation risk, putting obstacles in the way of the Chinese automobile expansion. Therefore, Russia's automakers do not have to rely only on their lobbying capacity and they are preparing for a tough competition.
Many analysts agree that the Chinese automobile industry is now experiencing "childhood diseases", which in the coming years will be overcome. Thus, principal analyst with ASM-Holding, Viktor Pashkov noted that cars from China, which regularly appear at the Moscow Motor Show, improving from year to year, that is, all complaints and observations identified during the operation in Russia, the Chinese carefully corrected. It should be noted that 3 years ago on Russia's automobile market, Chinese cars no one took seriously. But China has quietly promoted its products to Russia's market for openly dumped.

Post-crisis development of China and the impact on Central Asia
Positive results of anti-crisis measures of the Chinese government indicate that in the near future China will phase in the post-crisis development. Undoubtedly, this phase will be characterized by high rates of economic growth, increased industrial production and consumption of electricity and fuel. China will need increasing volumes of supplies of hydrocarbon resources, especially from abroad. In this regard, it is likely that Beijing will increase its foreign trade and investment activities in Central Asia - a region rich in oil, gas and uranium.

Based on the experience of the Chinese oil and gas corporations in South-East Asia, Africa and Latin America, it is clear that the strategy of energy security of China will be based on the principles of diversification and security of stable energy flows at low prices.
The first stage of the energy strategy of post-crisis economic development of China will be the completion of major pipeline projects - gas pipeline Central Asia-China and the extension of Atasu-Alashankou oil pipeline and their commissioning. In the second stage, China will intensify exploration and efforts to increase supplies of oil and gas from Central Asian republics.
This perspective fits in the overall interests of the states of Central Asia in terms of diversification of their exports. However, China and Central Asian gas powers have to solve the main issue - the price of natural gas, which will be delivered to Chinese consumers.

Conclusions
Analyzing China's anti-crisis program, it should be noted that if the anti-crisis policies of developed countries is primarily based on supporting the stability of the financial sector, in the heart of China's anti-crisis policy - stimulating domestic demand, both by stimulating private demand, and by increasing public investment in infrastructure industries, as well as improving the competitiveness of Chinese businesses, both domestic and foreign markets.
Assessing the prospects for full withdrawal of China from the economic crisis, it is important to note that this will largely depend on the evolving situation on the world market. Projected by many experts, a new wave of financial crisis in the U.S. and the EU will lead to a significant reduction in consumer activity and can strike on the value of the dollar as world reserve currency and the U.S. ability to sustain its public obligations. For China - the largest exporter and the lender of the U.S. economy - which could have a new wave of reduction of external trade, and thereby decrease the rate of GDP growth, as well as the loss of the main part of gold reserves that limit the ability to stimulate its economy at the expense of public finances.
However, if the U.S. and the EU will be able to prevent a new wave of the crisis by supporting the economic recovery, China has held a locomotive out of the Asian economic crisis might become one and the entire world economy as a whole. China's influence on the improvement of the global economy may also facilitate growth in demand for oil. And the role of locomotive of world economy, in turn, will open up good prospects for China in the global competition for economic leadership. Already, one can calculate that, given the projected growth in the next 12-15 months, China will pass Japan in terms of GDP and will be released on this indicator for second place in the world.
Moreover, it is clear that in future Chinese economic strategy will focus on reducing dependence on the situation in any country in the world, while the economies of other countries, including the United States will increasingly depend on China's economy. This is evidenced by a de facto recognition by the United States productivity of China's anti-crisis model and the U.S. attempts to develop a common platform with China on this issue. In particular, the topic of joint efforts by Beijing and Washington in the fight against global economic crisis was the focus of the talks U.S. Secretary of State Hillary Clinton with the Chinese leadership during her visit to China in February 2009. It seems that this item will also be one of the top of the agenda of the visit of U.S. President Barack Obama in China in November this year. This trend indicates the possibility of changing geopolitical situation in the world through a gradual shift towards increasing the role and importance of China.
 

Ashraf Khodjaev, Ph.D.

Center for Political Studies