China continues to have central place in world economy

BRUSSELS -- China will continue to have a central place in the world economy and it will be more a case China affecting the world than the other way round, said Daniel Gros, director of the Brussels-based Center for European Policy Studies, in a recent interview with Xinhua.

Gros said in the next five years, it's likely to see a slower growth in China, but steady and very slow growth in Europe and only a little big higher growth in the United States.

Though with a slower growth rate, he emphasized that China will continue to have a central place in the world economy.

"It will be more a case of China affecting the world, than the other way round," he said.

Concerning the main change for China, he said China has invested huge resources into a very good education for its young generation.

"This new wave will find jobs only if the domestic economy, especially services are opened up and made more dynamic," he said.

"My main concern is the excessive savings rate. This huge supply of domestic savings in China can be channeled only either in net exports or domestic investment," he added.

He thought a huge current account surplus may become unavoidable soon once private investment has reached saturation point.

Gros emphasized that China's "Belt and Road" initiatives will be important for some other countries, but he warned that even the best infrastructure cannot overcome structural problems in the countries along the belt or road and thus these countries cannot absorb a large part of China's surplus of savings.

In addition, Gros forecast that it's likely to see a combination of stable, but low commodity prices, and monetary policy will likely remain loose for longer than anticipated today,

but international trade is likely to growth much less than before.

"There are two reasons for this: China will become less open (to trade not to financial transaction) as it develops its domestic services and low commodity prices means the raw material producers can import only much less," he explained.