Uneven global recovery and China's contribution

07:59, November 08, 2010      

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Against the backdrop of uneven recovery of the world's economies, it is necessary to show coordinated policies among developed and emerging countries, and China's influence on world economy is increasingly important, economists said ahead of the G20 Seoul Summit, to he held on Nov. 11-12.

UNEVEN RECOVERY

Global economic recovery has slowed since the G20 Toronto Summit back in June this year. Wang Qing, chief economist for Greater China at Morgan Stanley, has told Xinhua that American and European's economies are losing momentum. With developed countries facing difficulty in the near term, emerging market economies, such as China, India, and Brazil, are showing resilience in their growth.

"Uneven recovery is the primary problem we face," Wang Qing said. "In the period after 2008 financial crisis, lack of balanced growth is likely the theme."

For October, the consensus forecast of economic growth for Euro zone, the United States and Japan is worse than that in May. Market is predicting that growth rates for Europe, the United States and Japan would be slower in 2011 than this year.

With weak economic statistics published in the United States, market is growing more pessimistic on forecast for 2010. Wang Qing explained that market is more guarded on the forecast.

"We believe the U.S. economic recovery is sustainable, so double dip is unlikely to happen. However, recovery process would take longer. We anticipate the U.S. GDP will exceed 2 percent in 2011," he said.

To stimulate economic recovery, the U.S. Federal Reserve has announced the second round of quantitative easing.

In Euro zone, as a result of improving sovereign debt situation, market is predicting that this year's economy grows faster than what has been expected. But the forecast for growth in the Euro zone is still the worst among Europe, the United States and Japan.

Ma Jun, Deutsche Bank's Chief Economist for Greater China, told Xinhua that the global economic growth is predicted to slow next year, but there is no risk for double dip. The global economic growth is forecast at 4.5 percent for this year and 3.8 percent for next year.

POLICY COORDINATION

Considering the uneven recovery and imbalances, analysts said developed countries and emerging market countries need to coordinate their policies in the global perspective. Ma Jun said what's the important is all the countries can't "benefit themselves at others' expense" in making trade and monetary policies.

Ma said the market's focus is put on the U.S. second-round quantitative easing policy, which, while boosting the country's economy, may depress the dollar exchange rate and accordingly harm the exports of other countries and lead to capital influx into developing countries.

Wang Qing said the currency policies of developed countries cause global liquidity, leaving the developing countries' domestic economic situation unmatched with the international policy environment. He said the emerging economies are advised to take tightening policies. CHINA'S CONTRIBUTION

Some analysis said the distribution of global economic influence is shifting from the west to the east after the crisis. The Asian emerging market countries, especially China, have become the most important momentum of the global economic growth.

Analysts said China has made great contributions to the global economic recovery. "China's economic size has taken up almost 10 percent of the global economy. In recent years, China's contribution to the global economic growth has reached 20 percent to 30 percent," said Ma Jun, who predicted that China will play an even more important role in the world's economic arena.

According to the forecast of Morgan Stanley, China will realize 9.5 percent growth next year and in the next 10 years, China will maintain an annual growth rate of 8 percent. Wang Qing said China' s influence on the world will be durable and far-reaching.

Robert Lawrence Kuhn, an international investment banker, said China's role in leading the world's recovery is "both remarkable and historic." "But it would be a mistake for the world to come to believe that China and China's growth can solve the world's problems," he said.

Source: Xinhua

(Editor:李佳)

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