In 2011, the global recession continued and the United States failed to revive its economy. The deteriorating debt crises in the European Union and the US have carried over the heavy economic burden to 2012. And although the growth of emerging economies will slow down, they still provide the much-needed momentum to the global economy. These in general are facts from last year and the expectations for this year.

In China, the pace of rising housing prices eventually slowed down in the fourth quarter of 2011. But it is still early to say that the real estate sector has returned to the rational level, because the prices have only stopped rising, not fallen, though it may cool down further in the third quarter of 2012.

In 2011, China's macroeconomic regulations began yielding results, and the possibility of an economic hard landing can be ruled out now. The outbreak of the financial crisis in 2008 interrupted China's regulations to deflate the housing market bubble, and the real estate again became a risky pillar industry.

Even now scholars and developers are emphasizing the "rigid demand" created by urbanization and industrialization, and urging the government to lift strict regulations. But the bubble is undeniable and speculation is still rife in the housing market. So it's important that the government continue its strict measures to deflate the bubble until housing prices drop to a reasonable level.

We should learn lessons from the wild increase in housing prices, for which some loopholes in economic supervision could be partly blamed. Society will pay a huge price if speculation in the housing market is not controlled in time. We need to expand the fields of investment for private capital, and encourage capital to flow into the real economy with supportive policies like tax reductions and making it easier to access to bank loans. Small and medium-sized enterprises should be accorded greater attention in this regard because they have suffered the most in the economic slowdown.

In the first half of 2012, the government may maintain the existing macro regulations but could lower the reserve requirement ratio. But if housing prices in first-tier cities such as Beijing and Shanghai decline by about 20 to 30 percent by the third quarter, the government may loosen the monetary and fiscal policies moderately.

With housing prices declining, land prices will drop too. In such a scenario, it would be difficult for the real estate sector to bounce back to the state it was in last year.

That will be good news for some promising sectors. The 12th Five-Year Plan (2011-2015) will see to it that the seven strategic emerging industries attract large amounts of private capital and let the real economy flourish. Though the revaluation of the yuan, increase in the labor cost and the pressure for transformation and upgrade of the economic development pattern pose challenges for the manufacturing exports sector, the third quarter of 2012 would be a watershed in China's economy, for it could see the Purchase Management Index (PMI) cross 50 percent.

Because the debt crises in the eurozone and the US don't seem likely to be resolved at least this year they could trigger other problems, though the situation may be better in US than in the eurozone.

The situation in the eurozone could even worsen because indications are that it is unlikely to solve its fundamental problems any time soon.

With their weak economic growth and large expenditures, the eurozone governments face the problem of reducing their financial deficits and lowering their political risks at the same time.

The present eastward expansion of the European Union, aimed at bringing countries with different economic bases under its umbrella, manifests a mistake, for it intends to treat people not working hard enough and those working really hard on equal terms. The EU is to tackle this crisis even if it establishes a unified fiscal system.

The situation may not be that worse if the Western countries make concessions to each other, and the debt crises could ease in the later half of 2012. But elections in some countries and regions will add to the uncertainties of the global market in 2012.

In the absence of enough good news, we should not expect significant changes in the overall global economic performance.