China's future growth won't be easy

Though the strong showings make the case that domestic businesses are confident in the economy's future, it's still too early to conclude that the level of foreign trade has returned to its days of “golden growth”.

The encouraging data won't hide a number of uncertainties with the economy. The global economic recovery is tepid at best, and supply and demand around the world remains imbalanced. Policies in major countries remain precarious; political games between nations are still fierce.

The global economy is expected to turn a corner this year and offer China's economy a better climate in which to do business. According to the International Monetary Fund (IMF), the global economy will grow by 3.1 percent this year with developed economies expected to increase by 1.3 percent and developing economies, 5.1 percent. But developed countries won't have as much room to expand their financial and monetary policies.

In the United States, the fiscal deficit amounted to US$1.4 trillion last year, 3.1 times the previous year's figure. It was also Washington's highest deficit rate since World War II. In other Western countries such as Germany and France, the government deficit rate also exceeded 3 percent, a level that the two countries had expected to control. In Japan, the deficit to GDP ratio was as high as 9.4 percent. Despite their moderate economic recoveries, major countries around the world are still mired in high unemployment rates that are at risk of worsening with local consumption slowing. New investment in industries has also failed to materialize in these countries and their industrial production hasn't moved forward as it once did prior to the global financial crisis.

The low rate of capacity utilization in manufacturing (basically, the actual output from manufacturing equipment as opposed to the potential output), in leading economies around the world has not been resolved despite a moderate rise shortly after the crisis. In January, the rate in the manufacturing industry in the U.S. was 72.6 percent, 8.3 percentage points lower than the average of 80.9 percent from 1972 to 2008. In the European Union, the figure was 72.4 percent, far lower than its average in previous decades.

Investment in major economies also remains soft. Last year, enterprise investment in the U.S. declined 17.9 percent from the previous year, the largest drop since 1942. The lingering recession in the global economy and insufficient global market demands will pose major hurdles to China's economic development.

To tackle the unprecedented economic recession, developed countries are more inclined to turn to protectionism to boost their own economies. In recent months, China has been embroiled in a spate of trade spats with Western countries over the country's exports, such as tires, clothes and phosphate. This is an inevitable result of the growing trade protectionism in these countries and their accelerated shift to develop their economies that are leaning on manufacturing.

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