Rebalancing China's economy to motivate global demand
Updated: 2012-03-07 13:23
HONG KONG - As China rebalances its economy in the next few years, with stimulated domestic demand spilling over to other countries, it will contribute more to the global demand, principal economist of the Asian Development Bank Song Leilei said here on Tuesday.
Song said at a forum that China's contribution to the world economy in the past few years was quite significant, citing the country's current account surplus has declined from a peak of 10 percent to less than 3 percent last year, a more meaningful net contribution to the global demand than the contribution to the global growth.
Song said China is "really serious" to rebalance its economy by entering a slow growth, because it realized that fast growth is not sustainable, and the cost is very big in terms of social, environmental and other aspects.
"I think this 7.5 percent lower growth target is consistent with its intention".
Nicholas Kwan, the head of research of East Global Research with Standard Chartered Bank, said to slow the economic growth a bit is not a big issue, the point is how to improve the productivity more efficiently.
He said "China may become the largest GDP producer within a decade or two, but on the current per capital bases, it is still only one tenth of what an American is producing on average. So it's a long way for Chinese people to become more productive in the world."
Kwan said the raw materials and industrial products that China now is producing count for over half of the world's total output, while the GDP per capital still remains relatively low. He said if the Chinese are going to produce the same amount as what the Americans have done so far, the globe will have little resources left.
"That's why we have to think about a changing way to growth model rather than high speed of growth," Kwan said.
In terms of the extent of China's slowing, Kwan said that the lowest economic growth rate in the last three decades was somewhere between 6 to 6.5 percent, and now it is very difficult to see China dip that level again. He expects China's GDP this year may gain 8 or 8.5 percent.
The forum, named as "Changing Global Landscape Tailing Effects of the Financial Crisis from a Regional Economic Cooperative Perspective," was co-held by the Hong Kong Committee for Pacific Economic Cooperation and the Trade and Industry Department of the Hong Kong Special Administrative Region government. More than 100 members from the academic, business and government sectors attended the forum.