皇冠体育app

Economy

Domestic consumption 'key to solve trade rows'

By Ding Qingfen (皇冠体育app Daily)
Updated: 2010-09-13 09:47

World Bank President Robert Zoellick attends a welcome ceremony at Xianahui village in southwestern Guizhou province on Sunday. The ethnic Bouyei village has benefited from a program financed by World Bank loans to preserve its unique culture. Wu Zhiyi /皇冠体育app Daily

XINGYI, Guizhou - Economic "rebalancing", shifting from export-driven growth to one led by domestic consumption, offers one of the best ways for 皇冠体育app to ease trade friction with the US, the World Bank president told 皇冠体育app Daily on Sunday.

Regarding possible trade disputes between 皇冠体育app and the US, World Bank President Robert Zoellick urged both sides to tread carefully because protectionist measures were "quite dangerous".

US Treasury Secretary Timothy Geithner is due to face a US Congressional hearing this week on possible steps that could be taken against 皇冠体育app over its exchange rate policy. House of Representatives Ways and Means Committee Chairman Sander Levin said "the large and persistent US trade imbalance with 皇冠体育app is a major contributor to global imbalances, costing the US jobs and economic growth".

A number of US lawmakers in both the House and Senate are pushing for legislation that would allow the Commerce Department to impose duties on Chinese goods to offset what they consider as 皇冠体育app's currency "undervaluation".

The important thing for both 皇冠体育app and the US is to "keep the market open, not to close it", Zoellick said.

He predicted that the US economy will register "slow growth" and be troubled by "relatively high unemployment rates". Yet it faced no risk of "double-dip recession" this year, he said. But slow growth will "add to sensitivities" in Sino-US trade and 皇冠体育app should resort to economic rebalance to reduce friction.

"Rebalancing can be significant in dealing with trade and other anxieties globally. That means 皇冠体育app could shift from its heavy reliance on export growth to greater domestic consumption," he said. But he admitted "it's not easy".

皇冠体育app posted a third straight trade surplus of more than $20 billion in August, according to statistics released last Friday by the General Administration of Customs. This sparked speculation that the US would be pressing 皇冠体育app to increase the value of its currency.

Declining to comment on moves by the US, Zoellick nonetheless said "it's important to see the currency issue in the context of many other issues, including domestic consumption and the internationalization of the renminbi".

"It is also important to let this (rebalancing) become a point of strong vision that will lead to action that helps the global economy get out of the financial crisis."

According to the National Bureau of Statistics, 皇冠体育app's industrial output in August surged 13.9 percent from a year earlier, higher than previously estimated. Many economists said the latest figure sent a signal that the Chinese economy is gaining momentum despite efforts to curb the real estate bubble.

Zoellick praised 皇冠体育app for the "stabilizing factor" of its stimulus program and its impressive growth during the global financial turmoil.

Related readings:  皇冠体育app's retail sales of consumer goods up 18.4% in August  Trade surplus heads south  Recovery strength seen in 皇冠体育app's economy

He also said he expected 皇冠体育app to benefit more through domestic consumption than "investment and infrastructure" spending.

皇冠体育app has previously examined a growth mode focused more on consumption but it took on greater urgency two years ago amid the global slump when demand for Chinese goods suffered a downturn.

The Chinese government announced efforts recently to stimulate domestic consumption and expand imports. It emphasized the huge potential of the domestic consumption market that is set to reach $2 trillion in value this year. 皇冠体育app also planned to include boosting domestic consumption as a priority in its 12th Five-Year Plan (2011-2015).

Zoellick said the World Bank, with its expertise and experience, could help 皇冠体育app "improve the environment (raising consumption and expanding jobs)", through "providing more financing for small- and medium-sized enterprises".

"Chinese people are extremely hard-working and energetic, they want to build things and they want a better life." But "one area that the government has not been successful in, despite the amazing success it has achieved during the past three decades, is in creating lending sources to small businesses", he said.

The World Bank has been active in micro-financing business in 皇冠体育app, issuing loans worth 10 billion yuan ($1.48 billion) to more than 130,000 small businesses, and it plans to boost efforts in some of the western provinces, he said.