New Model Needed For China’s Growth
Source: China Daily
China should boost domestic consumption and focus more on Asian and emerging markets as developed economies falter, the head of the International Chamber of Commerce said.
“China needs more balanced economic growth, while the engines of the United States and the European Union become weaker,” Gerard Worms, chairman of the trade organisation, told China Daily.
“China needs to increase exports to Asian nations, increase domestic demand, and reduce dependence on the US and the EU,” he said.
His remarks came as a survey released by the ICC last week showed that global trade growth will slow in 2012 and the volume is unlikely to reach pre-crisis levels for at least another four years.
Trade worldwide is expected to expand by 5.2 per cent this year from last. It grew 6.6 per cent in 2011 compared to the previous year. It is predicted to grow by 7.2 percent in 2013.
The situation in Europe will drag trade growth down, Worms said. But “this is a process that we have to go through before the landscape turns better in 2013″, he said.
China’s exports have been declining since the second half of last year. Outbound shipments grew by just 4.9 per cent in April from a year earlier, compared with 8.9 per cent in March, according to the General Administration of Customs.
Looking more at emerging markets will help boost exports, Worms said.
According to Li Wei, economist at Standard Chartered Shanghai, exports could see a bleak second quarter and diversifying destinations is a “long-term strategy” that “requires time”.
Officials from the Ministry of Commerce said emerging markets will be prioritised this year.
Central and western regions will be encouraged to export more.
In 2011, China’s exports to India, Russia and Vietnam grew much more, year-on-year, than the 20.3 per cent rise in overall exports.
“Emerging economic powers have ‘already arrived’, their growth and accumulated reserves stand in contrast to the debt and stalled economies of the developed nations,” Worms said.
Bolstering Domestic Consumption
“China is the engine of the global economic recovery,” and domestic consumption is very important for the world, Worms said.
Figures released last week showed that the economy is being buffeted.
Premier Wen Jiabao said over the weekend that the government will give priority to maintaining growth.
“It’s almost impossible for exports to show rapid growth,” said Zhao Ping, a senior expert at the Chinese Academy of International Trade and Economic Cooperation. “To maintain economic growth, it’s vital to stimulate domestic consumption.”
China announced last week it would allocate RMB26.5 billion (US$4.2 billion) alone in subsidies to promote the use of energy-saving household appliances and products.
“More policies aimed at stimulating domestic consumption are welcomed, and might be under way,” Zhao said.
Wen said the government will boost domestic consumption and stabilise external demand to promote steady and relatively fast economic growth.
The central bank this month cut bank reserve requirements, for the third time since November, to boost liquidity.
From 2011 to 2015, retail sales of consumer goods are expected to register annual growth of more than 15 per cent, hitting RMB32.0 trillion in 2015.
During that period imports are predicted to reach more than US$8 trillion.
“The growing importance of China in the world economy, along with other emerging economies, is a welcome development for the world community. The fact that hundreds of millions of people in China have been raised to a new prosperity is an historic achievement,” Worms said.
Soaring Trade Protectionism
“Protectionism is not a good answer … no good in the US, no good in the EU, and no good in China,” Worms said.
In April, China’s shipments to the US slowed to 10 per cent from 14 per cent in March, and exports to the EU continued to register negative growth last month, decreasing by 2.4 per cent.
As the inventories piled up and the federal government cut spending, the US economy grew by 2.2 per cent in the first quarter of this year, lower than market expectations.
The US Commerce Department on Friday announced it will impose preliminary antidumping duties, from 31 per cent to 250 per cent, after it ruled that Chinese manufacturers sold products below cost.