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'China engine' expected to roar ahead amid global economic woes

03-05-2012 02:35 BJT

As the second largest economy of the world, China has been viewed as a major engine for global economic growth. Confronted with widespread economic hardships, the world hopes China to continue to play a key role in boosting global economy.

STRONG CHINA GROWTH

A recent meeting of Group of 20 finance ministers and central bankers noted that the world economy had showed signs of moderate recovery, but faced considerable downward risks, given continued turbulence in the international financial markets, rising oil prices and high unemployment in many countries.

According to an interim economic report published in mid-February by the European Commission, the economic output of the 17-member euro zone is forecasted to shrink 0.3 percent in 2012 and the contraction for debt-laden Greece is put at a staggering 4.3 percent.

On the other side of the Atlantic, statistics showed that the U.S. economy is still overshadowed by many factors including mounting debts, a weak property market and investment slowdown.

In strong contrast, emerging economies such as China have staged impressive economic performances in recent years, becoming important "stabilizers" in global finance and more significant players in promoting readjustments to the world economic landscape.

Against the backdrop of weakening external demand and ongoing economic structural reform, China registered an economic growth rate of 9.2 percent in 2011.

The country's leading think tank, the Chinese Academy of Social Sciences, said the Chinese economy is expected to grow 8.9 percent in 2012 unless there is significant deterioration in the international political and economic situation, massive natural disasters or other major disturbances.

GROWING CHINA CONTRIBUTION

As China's economy grows, its contribution to the world economy also increases at a steady pace.

According to World Bank calculations, China's contribution to world GDP growth increased from 4.6 percent in 2003 to 14.5 percent in 2009.

Statistics from leading investment bank Goldman Sachs showed China's accumulative contribution to the global economy exceeded 20 percent from 2000 to 2009, higher than that of the United States.

For its Asian neighbors, China has become an increasingly important export destination, as demand from Western countries has been dwindling since the outbreak of the global financial crisis.

China's appetite for commodities has proven a powerful economic boost for countries like Australia, Brazil, Indonesia and also some Middle East countries. Meanwhile, China's imports of high-end mechanical equipment also helps shore up growth in Germany, Japan and South Korea.

According to preliminary estimates by China's Ministry of Commerce, China's total imports in the next five years will reach 8 trillion U.S. dollars. The figure is undoubtedly "good news" for the sluggish global economy.

South Korean scholar Mun Heung-go said China's economic development has brought positive effects for its neighbors and the Asia-Pacific region, and the effects are rippling through the whole world. "A stable economic development in China is of crucial importance to the stability of the global economy," he said.

CHINA'S STRONG PERFORMANCE EXPECTED TO SUSTAIN

Since the beginning of the year, many institutions including the International Monetary Fund (IMF) and the World Bank have rolled out their projections of China's growth rate in 2012.

These institutions agreed that China will grow above the enviable level of 8 percent in 2012, with sustained growth in the years to come.

The Chinese economy showed signs of slowdown in 2011, as a result of abating external demand and the introduction of policies to change its economic growth model.

Nonetheless, the basics of the Chinese economy are healthy and the Chinese government has abundant means of macroeconomic adjustments, said Sergei Sanakoev, director of the Russia-China Trade Cooperation Center, adding that there is no serious threat that could lead to recession in China in the next few years.

Amid heated discussions about whether the Chinese economy will have a soft landing or hard landing, Maurice Greenberg, former chief of the American International Group, said he believed a soft landing is more likely as China is more agile in decision-making than many other countries.

If a certain issue needs urgent decision, China could always do it, he said.

Arvind Subramanian, a senior fellow at the Washington-based Peterson Institute for International Economics, also recognized that the stable development of China's economy bears special significance for the global economy.

He said China should be given a "greater voice" in key global organizations including the IMF and the World Bank as Chinese policies are now of greater systematic significance at a global level.

The expert also noted that China has to deepen its economic reforms so as to overcome the structural obstacles and achieve sustained growth.

Editor:Shi Jierui |Source: Xinhua

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