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China's economic restructuring facilitates world growth

(Xinhua)

13:17, October 18, 2012

China's economic restructuring has made great achievements and facilitated the growth of the world economy, a Russian expert says.

Andrei Ostrovsky, deputy director of the Far East Studies Institute at the Russian Academy of Sciences, said in an interview with Xinhua that China has achieved "stunning" results in its economic restructuring, especially in the high-tech sector.

About four years ago, Chinese leaders made a strategic decision to restructure the economy from an export-oriented mode to domestically-driven growth, Ostrovsky said, adding that Beijing also adopted a two-stage innovation program with the first stage to be completed by 2020 and the second by 2050.

"Even now China has advanced to the third place by the number of innovations adopted for daily use," Ostrovsky said.

If the trend persists, by 2025 China will catch up with the United States in the high-tech sector, particularly in electronic gadgets, railroads and software, he said.

The growth of nano technology, transportation and airplane manufacturing are particularly eye-catching, Ostrovsky said.

Recalling a trip to China in April, Ostrovsky said he was impressed by Chinese know-how in nano technology.

A briefcase-sized "nano dog," for example, was designed to remotely detect explosives and fake alcohol and for use in spectral and molecular express-analysis, Ostrovsky said.

A blossoming transportation sector is another example of China's innovation boom, with futuristic magnetic-cushion trains changing the country's landscape and lifestyle, Ostrovsky said.

However, China may face challenges on its way to economic transformation due to a lack of energy resources and an aging population.

"For the economy to grow, energy consumption must grow accordingly. But energy consumption cannot grow indefinitely due to limited resources. This is a fact," Ostrovsky said.

The only way out of the vicious circle is to increase labor productivity and introduce energy saving technologies, so that the same or larger volume of production could be achieved with relatively lower energy consumption.

That is why the Chinese government invests huge amounts of money in national education programs at all levels, Ostrovsky said. He added that Chinese leaders understand that scientific and technological progress will assist a painless transition from low-efficient development to sustainable growth.

In 2004, for example, the Chinese government started to shift from a resource-dependent economy to a green economy and introduced energy consumption criteria for major enterprises.

Since then, alternative energy sources such as solar, wind, thermal and tidal power have begun to mushroom in the country, Ostrovsky said.

China's transition to domestically-driven growth has been boosted by the rapid growth of the country's urban population, momentum that needs to be maintained, Ostrovsky said.

Meanwhile, China has undertaken measures to improve the living conditions of the large rural population by raising pension levels, increasing health care accessibility and social payments.

The next "principal task" for China's economic restructuring, as Premier Wen Jiabao said in March, is to increase social guarantees of rural residents with the eventual target to equalize living standards between urban and rural population by 2020.

By achieving these targets, China will further enhance its domestic demand and provide its population with more consumer goods.

Technological innovation offers a fundamental means for China to overcome world economic woes, according to the expert. Green growth is the right approach toward economic transformation, while win-win cooperation brings the country more opportunities, Ostrovsky said.

China has not only made spectacular achievements itself, but also contributed to the global economy as a whole, as its vigorous economic interaction generated profits in other countries, Ostrovsky said.

A bullet-train now covers the 1300-km distance from Beijing to Shanghai in five hours. The project is so successful that Chinese contractors are building a high-speed railway connecting Los Angeles to San Francisco in the United States, he said.

More high-speed railways are being built in China. "In five years the entire country will be covered far and wide with the web of rapid railways. China's railways become a way to the future, literally," Ostrovsky said.

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