China's development crucial to world economy

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WASHINGTON, Oct 28 (Xinhua): China's development is crucial to the world economy and will help the developed economies and the world as a whole to stave off the possible recession, a leading US economist told the news agency in a recent interview.
"China, certainly by far the world's economy main drive... is accounting (for) about one quarter of total global economic growth," said Fred Bergsten, director of the Peterson Institute for International Economics (Peterson Institute), a top US think tank.
"I think China's own rapid growth will continue and that will provide a major impetus to the world's expansion that will help the US, west Europe and other slowly growing parts of the world drop out the recession," he said.
Bergsten, who first visited China some 20 years ago, has been to the country about a dozen times and was deeply impressed by the progress China has achieved since its reform in 1978.
"The progress I have seen in China by my own eyes was more dramatic than I've seen in many other countries in the world," said the economist, who served as an assistant secretary of the US Treasury during 1977-1981.
He said many of his colleagues in the United States have erroneously viewed China as a closed economy setting lots of trade controls and blockages for foreign investment.
However, he believed that China is the most open developing economy in the world, more open than many industrialised economy. "That is important because China chose consciously to integrate with world as a development strategy," Bergsten said.
According to him, China joined such international organisations as the WTO partly to promote the country's internal reform, further its development as well as modernise its economy.
As the current financial crisis causes a sharp slowdown in the US economy and a severe decline in the world growth, China also feels the impact of the financial tsunami.
"Many factories closed in China, many factories closed in the United States and everywhere, that's the process of market-based economy," said Bergsten.
He pointed out that some Chinese factories have gone bankrupt as the the Chinese yuan exchange rate started to rise, which is as inevitable as the economic slowdown in the US.
China is reducing its huge trade surplus and begins to rely more on its domestic demand, which the economist believed is a natural and desirable adjustment process for the country.
He said that China was too dependent on growing trade surplus in the last few years, which was "unsustainable."
As the world economy wrestles with financial turmoil, China also faces challenges in its export. And Bergsten predicted that "reaction against China will be intensified".
When asked about his opinion towards the current crisis, Bergsten responded quite optimistically. He said that although the current financial crisis is very serious, yet, it does not always lead to economic crisis.
Bergsten believes that the rise of China poses both challenges and opportunities to other countries.
"China's rise is clearly a very good thing to the world, a good thing for the United States," which means the US is now dealing with a more developed, more sophisticated and more mature China.
Meanwhile, PTI report says: China has become the world's third biggest trading nation, accounting for 7.7 per cent of the world total in 2007, the government said yesterday.
China had just 0.8 per cent of world trade in 1978, the first year of reform and opening up of the world's most populous nation.
The country was the world's third biggest international trader, after the United States and Germany, compared with 29th in 1978, the National Bureau of Statistics said in a statement.
Trade volume had risen by an average 17.4 per cent annually since 1978 when it stood at USD 20 billion to exceed USD 2.17 trillion last year, when it accounted for 66.8 per cent of the country's gross domestic product (GDP), compared with 9.7 per cent in 1978.
The ratio of industrial products exports had jumped to 94.9 per cent from 49.7 per cent in 1980, and that of primary products exports fell from 50.3 per cent to 5.1 per cent.