Experts: Economic growth remedy for world

Updated: 2011-11-05 10:18

By Lan Lan (China Daily)

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BEIJING - As Europe's debt troubles cast a shadow over the G20 summit in Cannes, economists are saying that countries should put a priority on achieving economic growth.

President Hu Jintao said on Wednesday that G20 members should use cooperation to promote the sustainable and balanced growth of the world economy.

"It's the common task of all countries to work together to escape this unsustainable and imbalanced trap," said Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation.

If a recovery and stable economic growth are to be obtained during a time of turmoil, there must be more coordination of macroeconomic policies and cooperation on trade and investments, Huo said.

"During such a difficult period, it becomes even more essential for economies to stick to open, market-based fundamentals and avoid protectionism in trade and investment," he said.

China and other emerging countries have acted in the financial crises as engines of world economic growth, a role they are expected to keep playing.

China's economic growth will proceed steadily onward despite the slow growth that its key partners are expected to see, said Zhuang Juzhong, an economist with the Asian Development Bank.

"Driven by China and India, the economic outlook for Asia, excluding Japan, remains good," he said. "All of Asia will continue to enjoy strong growth."

Even so, emerging economies are faced with two significant threats: the eurozone's worsening debt troubles and the United States' sluggish economy.

Richard Herd, senior economist for the Organization for Economic Cooperation and Development, said Greece, even if it benefits from European leaders' bailout offer, will still have a large debt load.

The EU has put forward a proposal that would have Greece write down the debt it owes to private investors by 50 percent. The proposed bailout package would bring Greece's debt load down to 120 percent of its economic output by 2020.

Walther Kiep, an honorary president of the German Atlantic Bridge Program, said the troubles in Europe were caused by the existence there of an incomplete economic and financial system.

"I don't understand why, after the first financial crisis in 2008, that we didn't consequently change the national and European legislation to avoid a repetition," he said.

"If we want to get the European Union system functional, we have to have a central European Financing Ministry, or we can call it something else, to coordinate the currencies and financial systems among the member states. I think it's a necessity if we want to get things in order."

"The developed countries were the initiators of the imbalanced economy," said Zhang Yansheng, director of the National Development and Reform Commission's institute for international economics research. "And emerging countries shouldn't pay the bill for the world economic imbalance."

China is moving to import more, improve its industrial structure and boost its domestic consumption, even as it is faced with rising costs and it tries to lower the amount of emissions it releases, he said.

China's trade surplus has been blamed as a source of the world economic imbalance, he said.

But a much bigger cause of that, he said, has been the international division of labor, since the majority of the country's trade surplus has resulted from the operations of international companies in China, he said.

China Daily