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Hao and Danny, Your comments with regard to the impact of the global crisis on China and resulting policy stimulus are well taken. Hao, you say that the (infrastructure-oriented) policy stimulus by itself it does not really lead to sustained rebalancing—away from investment and industry, towards consumption and services—but that it [would have been] a good opportunity to rebalance. You also say that the government engineered recovery is probably not self-sustaining. I much agree. Actually, China’s senior leaders, including prime minister Wen Jiabao have actually said very similar things. I think that the large policy stimulus was the right kind of response to a large shock hitting the real economy. It has helped create activity and shore up confidence in China and other parts of the world. It is like a kick-start. But we cannot expect that market-based activity will automatically surge in response to it, regardless of the global economic conditions. The good thing is that global economic conditions have at least stabilized. For China, this means that in 2010 net exports will not be as much of a drag on growth next year as it was this year. This, combined with likely better real estate activity, is set to do a lot in keeping growth at a respectable rate, even with a much smaller contribution of government stimulus and somewhat subdued market based investment. Here I think it would be good for China's policymakers to have realistic or modest ambitions with regard to short term growth. The kind of growth that we are seeing in China at the moment is really very good, relative to that in other countries. If growth of around 7-8 percent is accepted as good enough, there is no need for additional short term stimulus on current projections. That would allow policy making to focus on rebalancing and structural reforms. Danny, you say that it is difficult for China to sustain a prolonged contraction in export demand. I agree that that will be hard. It would lead to substantial closure of companies and lay offs in the export sector—much more even that what we have seen so far. Now, this is off course true for countries around the world. If there is no recovery in world demand that is going to be very tough for many countries. You also say that China is “buying time” until external demand recovers. I somewhat agree. In a way this is happening across the world at the moment, with government’s having stepped in to dampen the impact on the real economy of a major financial crisis. However, China’s government has actually been quite explicit in saying that the gobal crisis—and the sharp decline in demand for China’s exports—means there is more urgency to the project of rebalancing and getting more growth out of the domestic economy. Is rebalancing happening? In my mind it is impossible to deny that there has been a large number of policy initiatives rolled out in the last 2 years in the direction of rebalancing and that this is starting to show it impact. There is more to China’s domestic demand growth than infrastructure investment. Our upcoming China Quarterly Update—to be released October 29—will try to spell out and support this argument. Has China done enough rebalancing? No, not yet. I think the array of policies implemented so far is not yet enough to rebalance. The traditional pattern of growth has a strong momentum, meaning that rather forceful policy changes are necessary to change course. I am personally particularly encouraged by the policy action in the areas of health, education, social security and policies toward the rural sector. But there is indeed need for more policy reforms towards rebalancing.