China Becoming Growth Engine of East Asia

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Last updated at: (Beijing Time) Friday, April 04, 2003

China Becoming Growth Engine of East Asia

China is increasingly becoming the engine of the East Asia regional economy, a new World Bank report says.

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China is increasingly becoming the engine of the East Asia regional economy, a new World Bank report says.

The Global Development Finance 2003 report released by the World Bank Thursday says that against a backdrop of relative stagnation in Japan and volatile US demand, China continued to strongly increase output.

China's performance helped to drive the recovery in East Asia where an average regional growth of more than 6 percent is expected for the next two years, according to the report.

Despite various speculations about China's growth in the next 10 to 15 years, analysts seem to agree that growth of the global economy is increasingly dependent on rising markets like China.

Asian Development Bank President Tadao Chino said China would provide unprecedented opportunities for Asian countries in the next two decades. The growth of China's domestic market would inevitably create opportunities for Asian countries to increase their exports.

He said that in the longer term, these changing trade patterns should reduce Asia's dependence on Western markets, and help to mitigate the risk of a global recession caused by a simultaneous downturn in the US, Japanese and European economies.

It appeared that the newly elected Chinese government's commitment to sustained macro-economic policy and growth bore profound significance for the world, said Uri Dadush, director of the Development Prospects Group.

"Over the medium term, the improvements that developing countries make in their policy framework and investment climate can be a powerful force for higher growth and more rapid poverty reduction," said Dadush.

Over the past five years, the Chinese government had steered the economy through doldrums in the world economy by adopting a pro-active fiscal policy. Heavy government investment in infrastructure laid a solid foundation for future growth.

Deputy director of the National Bureau of Statistics (NBS) Qiu Xiaohua predicted that China's exports would contribute to only 5 to 6 percent of its economic growth in the next 15 years as imports kept rising. He added consumption would account for about 60 percent of the growth and investment another 30 percent.

Group Chairman of HSBC Holdings plc. John Bond said the consumer markets of tomorrow lay in those countries that had the potential to move very rapidly up the gross domestic product-per-capita scale, including China, India, Brazil and Mexico, with China at the top of the list.

Chinese government leaders had made clear their determination to continue expand domestic demand, deepen reform, open up the country wider and accelerate economic restructuring.

Tadao Chino said China still faced many problems associated with rapid growth, including urban unemployment, slow growth of farmers' incomes, mounting pressure on the environment and an inefficient financial system.

However, he said, the Chinese government's commitment to reformand excellent marco-control of the economy made him fully confident that the country would overcome all these challenges andachieve an average annual growth of 7 percent in the next 15 to 20years.

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