CONSUMERS TO DRIVE GROWTH: VICE-PREMIER

EastDay.com
2010-01-29 08:09

Special Report: Global Financial Crisis >>

Vice-Premier Li Keqiang reaches the podium to deliver his speech on
the second day of the World Economic Forum annual meeting in Davos
yesterday.

‘Excessively reliant on investment and exports’

Vice-Premier Li Keqiang said last night that China will seek to
boost domestic consumption to drive forward its booming economy,
acknowledging that export growth alone was unsustainable for
development.

Li, speaking at the World Economic Forum annual meeting in Davos, said
China would look to increase employment and income levels of its poorer
people, hoping to unleash the huge potential of the Chinese consumer.

He also said the government would break monopolies and encourage
competition while integrating more deeply into the global economy.

China recently surpassed Germany as the world’s top exporter, but
Li noted that economic strategies have been "excessively reliant on
investment and exports".

China has emerged as one of the key countries of interest at the Davos
forum with its economy set to overtake Japan’s as the second-largest
this year, and as the voice of the developing world.

However, its increasing clout has also led to conjecture on whether
it could play a role that lives up to global expectations.

As Kristin Forbes, a former member of the White House Council of
Economic Advisers, said: "China is the West’s greatest hope and
greatest fear."

Amid the hope-and-fear scenario, China should not overreach itself
while actively participating in global coordination to solve the
world’s problems, Chinese analysts said.

Discussions of China’s role amid and after the global financial crisis
have been heated in mainstream Western medias, especially during the
forum. More than 2,500 leaders from over 90 countries, representing
business, government and social sectors are attending the event.

The West expects Beijing to be more engaged in global affairs but
also anticipates increasing trade friction with the world’s largest
exporter.

"As it grows, China should do more in solving the world’s problems,
but only according to its capabilities," said Wang Dong, a researcher
with Peking University’s School of International Studies.

China has made consistent efforts in helping the world out of the
financial crisis, among other initiatives. It has, for example,
signed agreements with many neighboring economies on currency swaps
to help regional financial stability.

Its economy expanded by an impressive 8.7 percent year-on-year in 2009,
contributing to about half of the world’s total economic growth.

Although it remains a developing country, expectations are high that
it could do more to help the world, Wang said.

The mismatch partly comes from lack of understanding of China’s real
situation, said Yang Mian, researcher at Communication University
of China.

"Many foreigners come to China but they mainly visit mega cities,
such as Beijing and Shanghai, where living standards are quite high,"
he said.

"But China is a country with very uneven development. In the
countryside, for example, people in many places are far less affluent
than those in Beijing or Shanghai and many are stuck in poverty.

"We should not become complacent with commendations from overseas as
GDP keeps expanding."

The country’s per capita GDP remains low, ranking 106th in the world in
2008, ahead of Iraq but behind Armenia, according to the International
Monetary Fund. China also faces such problems as an inadequate social
security network and poverty.

"China must learn to explain to the world what it really is," said
Chen Gong, chairman of Beijing-based Anbound Consulting.