China becoming new engine for world economy: Forbes

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Last updated at: (Beijing Time) Thursday, September 18, 2003

China becoming new engine for world economy: Forbes

China is playing a more important role in global economic development, according to regional and global business leaders and economists at the 2003 Forbes Global CEO Conference, which concluded in Shanghai on Thursday. China's economy has maintained a high growth rate for over 20 consecutive years, bringing about huge business opportunities and injecting energy into the world economy.

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The three-day 2003 Forbes Global CEO Conference came to an end in Shanghai Thursday, focusing global attention on China's new role in the world economy.

Rich Karlgaard, publisher of Forbes, told the conference that when the global economy stood at a crossroads and sought a new engine for growth, China's success gave hope.

With the theme "Energizing Global Business: The China Factor", the conference echoed the 1999 Fortune Global Forum which was also held in Shanghai with the theme "China: The Next 50 Years".

But the different topics indicated that the whole world was also focusing on China's increasing role in promoting the global economy.

Against a backdrop of global economic downturn, China's economy had grown rapidly in recent years. Statistics showed China's gross domestic product (GDP) increased by an average 9.3 percent annually between 1989 and 2002. China's GDP topped 8 trillion yuan (967.35 billion US dollars) last year.

The improving investment environment and potential of the China market had attracted an increasing number of overseas investors. In 2002, China used a record 52.7 billion US dollars of foreign direct investment, the highest in the world.

Meanwhile, more Chinese enterprises had begun to explore business opportunities on the overseas market. China had over 30,000 enterprises with businesses in foreign countries and a combined investment topping 10 billion US dollars.

"The great success of China's economy plays an important role in the global economy, becoming a model for the whole world," said Nobel economics prize winner Joseph Stiglitz, Professor of Economics of Columbia University.

Stiglitz said that as the largest developing country in the world, China's entry into the World Trade Organization two years ago helped promote economic globalization and liberalization of trade and helped protect the interests of developing countries.

The World Bank predicted that China's imports were expected to account for 6 percent of the world's total GDP by 2005 compared with 3 percent now. The latest survey carried out by the Mastercard International showed the number of Chinese traveling abroad was expected to surge by 18 percent to 6.32 million in the second half of this year, becoming a major driving force behind the recovery of tourism in Asia-Pacific region.

Since 1995, Chinese enterprises' on the list of Fortune Magazine's top 500 companies had changed a lot. In 1995, only three Chinese companies were listed, compared with five in 1999, and 11 in 2003. Among the top 2,000 companies selected by magazine are 13 Chinese companies.

More overseas companies had also entered the Chinese market due to its great business opportunities. Of the Fortune top 500 enterprises, 174 had invested a total 11.2 billion US dollars in 328 projects in the Pudong New District, Shanghai, by the end of last year. They enjoyed an average 15 percent return on investment (total profits divided by actual investment). Some of the investors including GE reaped more than 100 percent return.

"The name of new opportunity is China," said Siaou-Sze Lien, senior vice-president of HP Services Asia-Pacific. As the first US high-technology investor in China, the company had decided to invest 200 million US dollars in China to expand its information business, and to establish a financial services center in Shanghai.

As Chinese products were exported to more countries, worries emerged about global deflation. The debate over whether China should revalue its currency and how China should develop was a hot topic at the 2003 conference.

Steve Forbes, president, chief executive and editor-in-chief of Forbes, said deflation in the United States should not be attributed to China, and the problem lay in US trade policy itself. Revaluation would hurt China's economy and influence the global economy.

He also warned speculators who had brought large sums of "hot money" into China would be "greatly disappointed".

Stiglitz agreed that China's economy would maintain its fast growth and would not "over heat", adding China still had much room to grow in the future, so as to shorten the gap in per capita income between China and the developed countries.

The economist also said China's accession to the WTO (World Trade Organization) brought changes to the world. China would play a "leading role" in securing the interests of the developing countries when negotiating with developed countries.

"With China's efforts, we are pleased to see a more energetic global economy, and also a fair global economy in the future," said Stiglitz.

Alcatel, the world's leading communications equipment provider, moved its Asia-Pacific headquarters to Shanghai in 2001, and early this year, it set up in Shanghai its third global research and development center.

Ron Spithill, president of Alcatel Asia-Pacific region, said China was the most important communications market in the world, and was important for future development.

While introducing advanced technologies and management experience to China, multinational corporations had made big profits here.

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