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Roach: China economy to rebound in 2010

(Xinhua)
Updated: 2009-01-30 15:00

China's economy is to witness a robust rebound in 2010, with its GDP growth topping 8 percent, said Stephen S. Roach, chairman of Morgan Stanley Asia Limited, in an exclusive interview with Xinhua on Thursday.

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He predicted that in the first half of this year, China's GDP (gross domestic products) growth would be below 8 percent, but China's economy was expected to pick up in the second half.

That is because China has been tied closely with the global economy and does not get special relief from the global shock, he explained.

The main driving force of China's rapid GDP growth in recent years is export, but now China's export is sliding, Roach said.

Even though Chinese companies are improving their positions and maintaining their competitiveness, there is nothing they could do to stimulate the demand of such countries as the United States, European countries and Japan, he said.

So it is the negative foreign environment that has impacted China's GDP growth, he added.

Roach believes that this year is the worst year for the global economy since the end of the second world war, but China's economy will be much better than those of many other countries in the world.

In addition to increasing spending on infrastructure, he suggested that China expand dramatically investment in social security, pensions, unemployment insurance and health care.

In his view, the most important thing for China to do now is to focus on domestic consumers.

As of banking bailout plans taken by many governments, he said China's banking system was in a better shape, because the banks did not invest a lot in illiquid assets and subprime mortgage.

Chinese banks, however, still face challenges because of the business cycle, he warned.