Slowdown may help China

By Wang Lan (China Daily)
Updated: 2008-01-24 10:10

A significant US economic slowdown could help China become consumer-driven rather than export-oriented, economists said.

But they warned it would be a difficult process, as domestic demand could drive up prices - especially in areas where markets are less efficient.

Wang Qian, an economist at JPMorgan Chase Bank, said domestic consumption is becoming a bigger factor in the nation's economic growth.

"Though a possible US recession would drag down other economies, China would be the exception, as a US-led economic slowdown would pressure the nation to expedite economic restructuring," Wang said. "Of course, without a US slowdown, China would also be on the way toward balanced economic growth, but the process could take much longer," she said.

But increased domestic demand for a wide range of goods and services may not be met by a less-than-efficient supply system that is sometimes distorted by bottlenecks. This would lead to the irrational price increases that cause CPI fluctuations.

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