Crisis will not last forever, China being growth engine

Updated : 2008-12-25 By : Wang YuSource : China Daily

The current financial and economic woes at a global perspective will not last forever, in line with INSEAD economists’ research.

A close look at the GDP per capita growth of the US from 1870 to 2006 demonstrated that despite of various ups or downs, there was a constant growth rate of 1.85 percent, Ilian Mihov, professor with economics with INSEAD released recently.

Of course, the growth is “based on continuous effort to innovate, to improve processes, and bounce back after shocks,” Mihov stressed.

This theory may work at a global perspective, not only in the US, but also in Asia.

Agreeing with Mihov, J. Frank Brown, Dean of INSEAD, added: “Western companies can no longer afford to maintain the status quo when doing business in Asia. They must possess a more holistic view of the region’s rapidly evolving innovation and entrepreneurship opportunities, as well as its regulatory, cultural and social landscape.”

This is a critical time for Asia and the rest of the world, said Brown. “The Asia growth engine is still travelling at a remarkable speed despite the uncertainty in the financial markets and a global economic downturn. Collaboration between leaders in the East and West will be the lifeline in creating sustainable growth in what has become an increasingly unstable marketplace.”

Right now there hides potential growth opportunities in Asia, especially China, in terms of investment and local consumption.

The infrastructure is marvelous in some parts of China, such as Tianjin, which is even better than counterparts of Europe, Soumitra Dutta, dean of external relations of INSEAD, commented after attending the summer DAVOS Forum in Tianjin in September of 2008.

Despite of the economic downturn, Tianjin still attract more than US$4 billion of foreign investment, thanks to its robust growth momentum.

In addition to infrastructure, China is right not figuring out every approach to enlarge internal demand, while seeking a transformation from a low-end manufacturing hub to an innovation- and service oriented high-end economy.

Chinais doing well in terms of major economic policies, INSEAD economists contended.

For example, China has done a good job in keeping its foreign exchange rate stable, benefiting its own and the world economy, Hellmut Schütte, senior affiliate professor of International Marketing of INSEAD commented.

INSEAD, one of leading international business schools in the world, recently held its second annual Leadership Summit Asia on its Asia campus in Singapore. The summit – drawing more than 300 distinguished business and global leaders – focused on the theme, “Is Asia riding or writing – the future?”

Speakers from business, government, academia and the media discussed how recent events ranging from the U.S. presidential election to the financial crisis will impact the rise of Asia and Western interactions with the region.

China Daily Tianjin Bureau

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