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China's growth pattern transformation to benefit world economy
(Xinhua)
Updated: 2010-03-13 10:18
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The transformation of China's economic growth pattern will generally have a positive effect on the world economy, foreign economists and experts say.
The transformation, which Premier Wen Jiabao said is imperative for China, has become one of the hot buttons at the annual plenary sessions of the national legislatures and has attracted world attention.
Richard Herd, an economist with the Organization for Economic Cooperation and Development, said China's decision to transform its economic growth pattern came just in time.
China has to shift its focus from labor-intensive industries to high-technology ones, facing growing labor costs and competition from other emerging economies whose development also take advantage of labor supplies, he told Xinhua.
China is exporting high-tech products that are "made in China" rather than "created in China," and thus has produced little added value, he noted.
PricewaterhouseCoopers chief economist John Hawksworth said China needs to change its economic growth pattern, which has for a long time depended on exports and investments.
As China's economy grows in size, it is increasingly difficult for exports to maintain their growth pace, and an economy relying more on consumption will be healthier, Hawksworth told Xinhua.
Duncan Freeman, a China researcher at Free Brussels University, said China's shift from an export-driven economy to one that relies on domestic demand is an important step toward re-balancing its trade with the United States and Europe.
China introduced an economic stimulus package to tackle the global financial crisis, which is not sustainable. Therefore, it is natural for China to engage in a transformation of its growth pattern, Freeman said.
John Kayode Shinkaiye, the African Union's chief of staff of the Bureau of the Chairman, said a change in China's growth pattern will benefit Africa.
"China's economic growth means a lot of positive things for Africa. It means that Africa will be able to increase its share of the Chinese market, it also means China will be able to continue to support Africa in terms of providing financial resources, " he said.
However, it is generally believed that the transformation of China's economic growth pattern is no easy task.
Hawksworth said China faces both short-term and long-term challenges in the transformation process.
"There is a short-term issue about trying to control overheating and preventing the economy from becoming subject to asset price rises which made a bubble that later bursts," Hawksworth said.
The long-term challenge is how to transform the economy into one driven more by household spending, he said.
"That is partly about encouraging households to feel more confident about the future, about providing better healthcare from the state or better pensions to the households so that they feel that they don't have to save so much money in order to provide for their own future and so they can feel a bit more confident about spending money," he said.
Bernard Dewit, chairman of the Belgian Chinese Chamber of Commerce, sees employment as a big challenge for China in transforming its economic growth pattern.
Transformation means China has to shift its focus to producing more sophisticated products with more added value, which in turn means a shift to less labor-intensive industries, Dewit told Xinhua.
"To produce less sophisticated products, you need sometimes more man power, so you can employ more people," he said.
During the transformation process, fewer but better educated workers are needed, which can result in an increase in unemployment, and at the same time, demands enormous investment in higher education, he said.
"In the long term, it is the only way to cope with the progress of science and technology," he said.
Dewit also warned of social unrest and regional imbalances in the process of of development.
