China Props up World Economy

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Last updated at: (Beijing Time) Monday, March 24, 2003

China Props up World Economy

China's strong economic showing has shored up sluggish global economic growth and created an expanding market for regional economies.

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China's strong economic showing has shored up sluggish global economic growth and created an expanding market for regional economies.

Officials and economists told the China Development Forum that the Chinese Government's fiscal policy will keep its economy on the fast track in the short term.

Leaders' steadfast commitment to structural reforms will help the country achieve sustained growth in the long term, they said.

The two-day forum, which ends today, was organized by the State Council Development Research Centre.

China is now making a highly disproportionate contribution to the growth dynamic of the sluggish world economy, said Stephen Roach, chief economist with Morgan Stanley.

China currently accounts for about 4 per cent of a world economy valued at US$32 trillion.

But in a weakened global economic climate, China was responsible for 17.5 per cent of the growth in world gross domestic product last year - second only to the growth contribution of the United States, Roach said.

A well-performing Chinese economy is also a promising market for other economies, especially those of the rest of Asia, said Tadao Chino, president of the Asian Development Bank.

Customs figures revealed China ran a US$13 billion deficit with South Korea, a US$5 billion deficit with Japan and a US$8 billion deficit with Southeast Asian economies last year.

Chino said China is expected to be Asia's largest importer by 2005.

"The growth of China's domestic market will inevitably create opportunities for regional investors to tap a growing demand for products and services," Chino said.

East and Southeast Asia are well placed to exploit these opportunities given their comparative advantages of geographic proximity and existing business networks with China, he said.

Qiu Xiaohua, deputy director of the National Bureau of Statistics, said the Chinese Government's continued input into infrastructure and its measures to increase the private income of individuals are likely to help the country achieve 7-8 per cent growth this year.

He said the impact of the ongoing war in the Middle East on the Chinese economy would be limited if the war ends quickly. But the impact could be significant if the war lasts a long time as it would pressure China mainly through its economic consequences for the world economy.

Roach, of Morgan Stanley, said China's deepening reforms will help the country build a healthy economy in the future.

In a challenging economic climate, most nations temper their enthusiasm for reform, shying away from the pain associated with the requisite restructuring and downsizing, Roach said.

"But not in China. China's steadfast commitment to reforms is what separates it from the pack," he said.

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