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Economy Watch
Economy Watch follows the progress of the world economy and offers you our weekly picks. Be sure to visit for the weekly updates.
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February 11 Updates
| Chinese official: India's growth is expected to exceed China
Indian economy is expected to grow at a faster rate than China in the near future.
The Chairman of China's National Council for Social Security Fund, Dai Xianglong, Speaking at the annual DSP Merrill Lynch India Investor conference in New Delhi has also called for gradual internationalisation of Chinese and Indian currencies that would help in safeguarding financial stability in Asia.
"India attaches more importance to knowledge and technology innovation in the development of the new-and-high tech industries. We believe that India may achieve better development in the next few years. In future, the economic growth rate of India is likely to exceed China's," he said.
India and China are the world's two fastest growing economies, coming out of the global financial crisis relatively unscathed.
Impacted by the meltdown, the world economy shrank in 2009 whereas the two Asian giants saw their economies growing at impressive rates.
India recorded 6.5 per cent growth, while China's GDP expanded by 8.7 per cent in 2009, according to the International Monetary Fund.
Xianglong noted that both nations "should strengthen financial exchanges and cooperation and work together to promote the reform of the international financial system and safeguard the financial stability of Asia.
"During this process, the gradual internationalisation of Renminbi and Rupee is of special significance".
China might become top world exporter, but weakness remains
China will probably overtake Germany to become the world's largest exporter though its exports in 2009 had fallen 16 percent from a year earlier, according to figures released Sunday by the General Administration of Customs (GAC).
But Chinese experts and officials said the country was far from being a real trade power if measured by exports structure, technological innovation and industry competitiveness.
GAC figures showed China's monthly exports in December 2009 were worth 130.7 billion U.S. dollars, up 17.7 percent from a year earlier. It was the first rise since November 2008, when the country's exports contracted 2.2 percent year on year after sluggish overseas demand crippled China's export engine.
In total, GAC figures showed that China's exports in 2009 stood at 1.2 trillion U.S. dollars, down 16 percent from 2008.
Germany, which had been since 2002 holding the title as the world's largest exporter, didn't unveil its export value in 2009 yet. But BGA, the Federation of German Wholesale and Foreign Trade, had forecast that Germany's exports in 2009 might fall 18 percent to 816 billion euros (about 1.18 trillion U.S. dollars).
“The prospect that China will overtake Germany to become top global exporter only means that China has indeed become a large trading country in terms of exporting scale," said Zhao Jinping, a researcher with the Development Research Center of the State Council (cabinet).
"But in terms of the structure of exports, technological innovation and industry competitiveness, China is far from being eligible for the title of 'trade power'," he told Xinhua.
According to Zhao, China's exports had changed from labour-intensive products in the 1990s to current technology-intensive products, and electrical and electronic products as well as high-tech products have become a most important part of China's exports. But China's technology-intensive exports fell in the category of processing and assembling trade.
About 83 percent of its high-tech exports and 75 percent of electronic exports were made by foreign-funded enterprises, Zhao said.
He said German enterprises put more emphasis on technology, branding, quality and services, which generated higher added-value.
Zhao said a full recovery of China's trade might take another several years. China should promote exports of high value-added products through branding and technological innovation, he added.
Zhong Shan, vice minister of commerce, agreed that China was not a strong trade power. "China should adjust the product structure and transform its growth pattern," he said.
In December 2009, China's imports hit record monthly high to reach 112.3 billion U.S. dollars, up 55.9 percent from the same period of 2008, according to the GAC.
The Fujian-based Industrial Securities said in a research note Sunday that the jump of December's imports resulted from strong domestic demand for commodities and mechanical equipment that were necessary in construction of infrastructure projects and property.
Imports of raw materials that were used in manufacturing trade also rose significantly, it said.
According to the GAC, China's imports of iron ore in 2009 rose 41.6 percent from a year earlier to 630 million tonnes, at an average price of 79.9 U.S. dollars per tonne.
In 2009, the economy imported 200 million tonnes of crude oil, up 13.9 percent from 2008, at an average price of 438 U.S. dollars per tonne.
The country's imports in 2009 stood at 1.01 trillion U.S. dollars, down 11.2 percent from a year earlier, said the GAC.
In December 2009, China's foreign trade amounted to 243 billion U.S. dollars, which represented a year-on-year increase of 32.7 percent and a month-to-month rise of 16.7 percent.
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