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Demand from China becomes the ‘ballast’ for global growth

(People's Daily Online)

16:57, January 30, 2013

In recent years, while Europe and the United States economy remained in the doldrums, China's economic growth has made increasing contribution to world economic recovery. The Chinese market has become the safeguard for the profit growth of the global top 500 enterprises and the demand from China has become the "ballast" for global economic growth.

Yi Gang, deputy president of the People's Bank of China said recently that as the Chinese domestic demand market constantly improves, the demand in the importation sector will naturally rise along with it, which means China's economic growth will become an important engine spurring global demand conditions and will create a worldwide economic win-win situation.

Shortage of demand becomes a mortal wound of global economy

Since the 2008 financial crisis, the demand from major economies has remained weak; the sovereign debts of developed countries were constantly growing; trade and investment protectionism was clearly on the rise, and the pace of world economic recovery slowed down. During the next period of time, as the entire world economy goes into a deep transformation adjustment, economic downturn will become the new normal state of global economy.

"Demand is currently the world's most scarce resource," Lou Jiwei, chairman of China Investment Co. Ltd. said at the Annual Meeting of China's Economy that China's economic growth this year may be more than 8 percent, supporting a very large global demand, while to a large extent the demand in Europe is shrinking.

Demand from China contributes positive energy

Although all countries around the world are faced with weak demand and decline in exports, China's huge demand and broad market remains one of the few bright spots in the current world economy. Demand from China is contributing positive energy to the world economy.

In the next five years, the total scale of China's imports of goods will exceed 10 trillion U.S. dollars and will provide global companies with more investment opportunities and markets.

"Since the financial crisis, multinational corporations show obvious intent to embattle the Chinese market," said Zhang Monan, associate researcher at the Forecast Department of the State Information Center.

According to a survey carried out in 394 Chinese and foreign enterprises by the Development Research Center of the State Council in May 2012, multinational enterprises rank market on the top when positioning China in their future strategies. The huge domestic consumer market in China is still able to attract global enterprises. At present, 480 enterprises among the Global top 500 has established subsidiaries in China. Various multinational companies have set up a total of nearly 1,000 R & D centers in China.

According to assumed scenario that China's average year-on-year GDP growth will be 7 percent and that of the United States will be 2 percent, and on the premise that the exchange rate of the yuan against U.S. dollar will rise an average of 3 percent annually, it is expected by the Boston Consulting Group that the domestic consumption level of China will exceed half of that of the United States by 2015, and will reach 80 percent of the latter by 2020.

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