Xinhua Insight: Business elites confident over global economy as uncertainties remain

Updated: 2011-09-14 23:04:00


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DALIAN, September 14 (Xinhua) -- Although the global economic picture seemed bleak to many of those attending an international forum Wednesday in Dalian, they still expressed confidence in world economy, particularly that of China.

More than 1,500 participants -- including 600 chief executive officers -- from around the world gathered in the port city of northeast China's Liaoning Province for the annual meeting of the "New Champions" of the World Economic Forum (WEF), exchanging visions on the global economic outlook.

In his keynote speech at the opening of the WEF meeting, Chinese Premier Wen Jiabao reassured global business elites that the new developments, both internationally and in China, have not changed the fundamentals of China's growth.

"China's economy is generally in good shape. We will continued to implement a proactive fiscal policy and a prudent monetary policy," Wen said.

In the first half of 2011, China's gross domestic product (GDP) rose by 9.6 percent year-on-year and the increase in the consumer price index (CPI), a main gauge of inflation, weakened to 6.2 percent year-on-year in August from a 37-month high of 6.5 percent in July, according to the National Bureau of Statistics.

But as the world economy slowly recovers, uncertainties and destabilizing factors grow, Wen said, citing the sovereign debt risks in the EU and high unemployment in the Untied States.

Wen noted that as the size of the Chinese economy grows, it will become difficult to maintain high-speed growth for the long term.

"But we in China remain clear-headed and are firm in our confidence," Wen said.

Over the last 10 years, China has grown into the world's second largest economy with an annual growth rate of 10.5 percent.

The slower economic growth since the second quarter was mostly the result of proactive macro regulations, Wen said.

To help stabilize the world economy and boost growth, Wen said he hoped the United States would give wider market access to Chinese investors and relax its export controls to China.

Noting China's willingness to increase its investment in Europe, Wen urged the EU to recognize China's market economy status as a good gesture before 2016 when China will automatically acquire the status according to World Trade Organization rules.


Though the recent turbulence in the global equity markets worried business participants at the WEF's annual meeting, many said they were still optimistic about the world's economic outlook, particularly that of China.

Dominik Knoll, Chief Executive Officer of World Trade Center of New Orleans, told Xinhua on the sidelines of the WEF meeting that China's economic growth is quite impressive, and he expected China to keep a great pace of economic growth.

"I am quite optimistic about that the current crisis will be overcame. ... Governments should coordinate policies in the future. In that view, crisis, as a chance, becomes a good thing to make us closer," said Knoll.

Victor Halberstadt, Professor of Economics with Dutch Leiden University, said Premier Wen had conveyed in his speech a clear and precise understanding of the economic situations in the United States and the EU.

"Wen is constructive and optimistic in handling the complicated problems," Halberstadt said, adding China has shown its determination to control inflation and solve other problems affecting the country's development.

Concerns on the European sovereign debt risks and the deficit and job problems in the United States also unnerved economic observers at the meeting.

William R. Rhodes, senior adviser of Citi, urged European nations to take quick actions to address the sovereign debt crisis while the Group of 20 should play a bigger role in initiating more international cooperation and coordination to strengthen the world's financial system.

Before his retirement from the post of Citi's senior vice chairman, Rhodes was a veteran banker helping to solve many financial crises such as the Latin American debt crisis and the Asian financial crisis in the 1990s.

"Timing is everything and politicians are always behind time," Rhodes told Xinhua on the sidelines of the meeting, calling to set a timetable for the EU to solve the sovereign debt crisis problem to prevent full-scale contagion of the banking system.

According to Rhodes, determination and leadership are lessons the EU must relearn from previous debt crises in Latin America and Asia.

Zhu Min, Deputy Managing Director of the International Monetary Fund, said he expected the markets to remain very volatile in the near future but that does not mean a second Great Contraction.

"Indeed, now it is a key moment. If governments fail to take decisive measures to solve the current risks, it is possible for the world to slide into a double-dip recession," he added.