Top Biz News

China faces dual challenges in 2010: UN expert

(Xinhua)
Updated: 2010-03-03 16:11

UNITED NATIONS: Despite economic successes over the past year, China faces dual challenges in 2010 as it interacts with rich nations eager to pass along the burdens of the crisis and the side effects of a massive stimulus package, a UN expert told Xinhua in an exclusive interview.

"China's economic achievements in 2009 are well-known to the world," said Hong Pingfan, chief of the global economic monitoring center of the UN Department of Economic and Social Affairs (DESA).

The year 2009 saw the world mired in the first global economic recession since World War II. It was against this background that China launched a massive fiscal stimulus package as part of its strenuous efforts to tackle the crisis, successfully achieving an 8-percent growth for the year, Hong said.

Enhanced role

In 2009, China actively became involved in the international economic and financial agenda by appearing at gatherings of key international economic platforms -- the Group of 20, the UN General Assembly and the Asia-Pacific Economic Cooperation (APEC).

By taking part in these important events, Chinese leaders played a pivotal role in promoting global coordination and cooperation to tackle the financial crisis, Hong said.

"China had always taken a firm stand on these occasions, that is, to protect world economy, trade and free flow of investment and reject trade protectionism," he said.

Besides presenting itself at the summits, China also made use of other channels to push forward reform of the international financial architecture, emphasizing fairness, openness, inclusiveness and order, and highlighting developing countries' rights of speech and decision-making.

"Through these activities, China has greatly enhanced its role in the global economic and financial arena," Hong said.

"At a time when all developed countries and some 40 other developing countries were still suffering from economic recession and sliding per capita income, China was constantly enjoying a growing per capita income, which was definitely an amazing achievement," the UN expert said.

"China has not only realized its own economic growth, but also boosted the confidence of other countries to deal with the financial crisis, giving an impetus to the world economic recovery," he said.

Dual challenges

In 2010, however, China faces dual challenges in terms of economic development, Hong said.

According to him, from the perspective of the international economic environment, although the world economy will continue on its recovery path, some of the leading developed countries are expected to recover at "an exceedingly slow pace."

As such, it would be impossible for these countries, including the United States, West European countries and Japan, to contribute in any significant way to world growth as they struggle to cope with ever higher unemployment rates, a very likely scenario in 2010.

Besides, the government deficit and debt of these countries are also projected to widen even more in 2010 -- "we are already seeing some signs," the UN expert said.

Under mounting pressure from expected slow growth and worsening fiscal conditions, these countries will by all means try to pass along burdens incurred by the crisis to other countries, among which China will likely become a top target, Hong said.

As the world's top exporter, China is also leading the world in terms of foreign trade surplus. "Major developed countries will do all they can to exert some kind of pressure on China," Hong said. "In reality, there have already been requests for yuan appreciation and trade protective measures taken against China."

Generally speaking, China will continue to experience tough challenges in the international economic arena in 2010, the severity of which should not be underestimated, he said.

On the other hand, the Chinese economy also has its own problems, he noted. In 2009, China's aggressive policies and measures did not stimulate domestic demand without some side-effects. Consequently, growth from investment demand has far exceeded that from consumer demand, and credit volume has ballooned, signalling potential risks of asset bubbles, Hong said.

Under the circumstances, the Chinese government is gradually taking measures to seek a readjustment of the economic structure, without which the sustainability of the economy would be called into question, he said.