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Greater economic onus

(China Daily)
Updated: 2009-01-16 07:40

China's rise to the position of the world's third largest economy is of both symbolic and substantive importance.

A second upward revision of China's gross domestic product in 2007 by the National Bureau of Statistics showed that the country had overtaken Germany to become the biggest economy behind the United States and Japan.

For a developing country like China which has maintained an average annual growth rate of nearly 10 percent for three decades, the new economic status clearly illustrates how remarkably it has done in pursuing development and prosperity.

In terms of tangible improvements in people's living standards, though, the higher world ranking of the Chinese economy is surely of only symbolic significance.

However, given its increasing contribution to global growth, the steady expansion of China's economic strength does matter a lot for the world economy that is now in the grip of a major crisis.

In spite of all the difficulties, the forecast is that the Chinese economy will maintain a stable and relatively fast growth. Though it will not expand as fast as it did in 2007, up 13 percent year-on- year, China's economic growth could help save the world economy from slowing too much and too fast amid recession in major developed economies.

In this sense, the larger the size of the Chinese economy, the more powerful a driving force China will be for the world economy.

Admittedly, recession in the United States and Europe have been taking their toll on the Chinese economy. The country's export, a key growth engine, has fallen for two months since November. Now, latest statistics show that foreign direct investment fell 5.7 percent to $5.98 billion in December from a year earlier after dropping 36.5 percent in November.

These are clear signs for the hard times ahead. Shrinking overseas demand will further squeeze Chinese exports. Falling foreign investment will also undermine the Chinese government's efforts to stimulate domestic investment.

These problems may exert considerable pressure on China's economic growth in the near future. But China's long-term growth prospect remains bright and that is mainly because the country's urbanization and industrialization still have decades to run.

More importantly, it is likely that the ongoing transformation of China's development pattern - with a greater emphasis on domestic consumption for growth - will fuel the rise of the Chinese economy for a fairly long period.

(China Daily 01/16/2009 page8)