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Counting the Cost
China's economic transformation
As China's economic boom is built on exports, where will the country turn when that starts to falter?
Last Modified: 10 Mar 2012 13:44

China is an economic miracle which is built on exports, but where does it turn when that starts to falter?

When China's National People's Congress meets once a year it gives us a 'big picture' of where the government sees the country in the future.

The top-line, in what was Premier Wen Jiabao's last congress before stepping down, was that China's growth target was being revised down to 7.5 per cent. It has been above 8 per cent since 2004.

Wen also acknowledged that China needs to start shifting away from exports to the West and has to start looking more at domestic consumption.

But the domestic situation is problematic. The Chinese are great at saving, but that means they are only putting 37 per cent of their income back into the economy - in emerging markets it is about 50 per cent. So to stimulate the economy, people have got to start spending the cash.

But how do you turn around a huge export economy that has created a foreign currency surplus of more than $3tn? And how do you encourage domestic consumption?

We talk to Chandran Nair, the CEO of the Global Institute for Tomorrow, about China's economic transformation.

He says: "China and the rest of Asia should not adopt the sort of consumption-led economic model that we have adopted for the last three, four decades from the West. I think the time is up for that principle because I believe that a world in which five to six billion Asians in 2050 are consuming like the average American or European is not one that can be sustained... I think most of us are in denial about this assumption that all of us can live some kind of western dream. This is simply not possible."

The top job at the World Bank

There is a bit of an unwritten rule about the leadership of the World Bank. It it goes back to Bretton Woods in 1944, a conference which essentially designed the economic bodies and systems we have in place today. It was decided then that an American would be the World Bank president and a European the head of the IMF.

With Robert Zoellick's five-year term as president ending in mid-2012, who will be the next leader of the World Bank?

There is one movement pushing for a break with the American tradition and China has explicitly called for an open selection process based on merit.

So far though the most prominent person to put their name forward is an American. Development economist Jeffrey Sachs spoke to our business editor Abid Ali about his candidacy, the US economy and China's global role.

Counting the Cost also looks at India's energy dependency and how New Delhi, one of the largest importers of Iranian oil, can get around sanctions on Iran.

Plus, strong at home but weak in Europe: we put GM's deal with Peugeot under the spotlight at the Geneva Auto Show, one of Europe's big automotive showcases.

 

Counting the Cost can be seen each week at the following times GMT: Friday: 2230; Saturday: 0930; Sunday: 0330; Monday: 1630.

Click here for more on Counting the Cost.

Source:
Al Jazeera
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