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Sinking global economy looks to China

With the global financial crunch topping the agenda at recent international conferences, China is increasingly being seen as an important factor in resolving the crisis and creating stability.

business Updated: Nov 24, 2008 10:41 IST

With the global financial crunch topping the agenda at recent international conferences, China is increasingly being seen as an important factor in resolving the crisis and creating stability.

China has been in the spotlight at several recent meetings including the Asia-Europe Meeting (ASEM) in Beijing, the prime ministers' meeting of the Shanghai Cooperation Organization (SCO) in Astana, the summit meeting of the Group of 20 (G20) developed and emerging economies in Washington, and the ongoing Asia-Pacific Economic Cooperation (Apec) leaders' meeting in Lima.

Media and analysts have been busy interpreting Chinese leaders' remarks, analyzing China's solutions to the current financial crisis, and evaluating the country's contributions to the world economy.

Behind such interest and attention is China's growing national strength and international influence resulting from 30 years of reform and development.

According to China's National Bureau of Statistics (NBS), the country's economy in 2007 accounted for some six percent of world's total gross domestic product (GDP), a big increase from the 1.8 percent in 1978, making China the fourth largest economy in the world.

China has the world's largest foreign reserves and is the top trading partner of Japan and the second largest trading partner of the United States and the European Union (EU).

Experts say the figures mirror China's growing role as both a commodity and service supplier and a large consumer in world trade, making it one of the major engines of the world economy.

During talks with Chinese premier Wen Jiabao at the ASEM Oct 24, EU chief Jose Manuel Barroso said China is an important factor in stabilizing the global economy and has played a responsible role in dealing with the global financial crisis.

His remarks were echoed by Paul Evans, a professor at the University of British Columbia in Canada, in his article "Getting China just right," published in the Globe and Mail.

"China is no longer 'over there' but a daily part of our economic lives," he wrote. "The current financial crisis underscores the significance of China's new global role in unmistakable ways."

Since the international financial crisis began, China has been taking active measures to fend off its ripple effect.

Earlier this month Beijing announced a stimulus package of four trillion yuan (about $570 billion) to finance programmes in 10 major areas over the next two years, including low-income housing, rural infrastructure, electricity and transport in a bid to offset adverse global economic conditions by boosting domestic demand.

At the SCO meeting in the Kazakh capital of Astana in October, Wen said China's biggest contribution to fighting the global financial crisis would be to first maintain the stability of its domestic financial market and secure a stable and relatively rapid development of the Chinese economy.

The country's economic stimulus plan has been hailed widely. World Bank chief Robert Zoellick said the package was "very wise," while David McCormick, the US Treasury Department's undersecretary for international affairs, said the move could also benefit other nations in the aftermath of the crisis.

Brazilian Finance Minister Guido Mantega said the stimulus package was an "anti-cyclic" policy to avoid shrinking of the economy. China has taken "the lead" with the plan to avoid an economic slowdown amid the international financial turmoil, he commented.

The massive stimulus plan could expand China's demand for imports and thus benefit the global economy.

Peruvian President Alan Garcia, while addressing the meeting of business leaders of the Apec countries Friday, said the stimulus measures have not only facilitated the restoration of the Chinese people's confidence but also helped the world regain confidence.

First Published: Nov 24, 2008 10:38 IST