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World should reassess China's power before naming it savior

(Xinhua)
Updated: 2009-04-01 18:48

The G20 Summit on Thursday in London is entrusted with hopeful task of rescuing the world economy from a downturn. Many pin their hopes on China to bolster the teetering global economy.

In a flood of media reports, China has been described as a "knight" who will save the world from the recession -- after all, it is the world's third largest economy, holding $2 trillion foreign exchange reserve in hand and the only major economy reporting growth when others were faltering.

But is China able to rescue the world?

Although China's economy has boomed in recent years, it still accounts for just 6 percent of the global economic output and contributes less than a fifth of the United States' figure.

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Equivalent to the size of China's economy is a massive population of more than 1.32 billion, or nearly 20 percent of the world total. The per capita gross domestic product (GDP) of China ranked after 100 on the world list.

The country's GDP topped $4.32 trillion in 2008, based on the whole year's average exchange rate of $1 against 6.948 yuan. However, its per capita GDP was only $3,266.

According to the National Bureau of Statistics, China's rural per capita net income reached 4,761 yuan ($697) last year and urban per capita disposable income came to 15,781 yuan. A total of its 40.07 million rural population still live below the country's 1,196-yuan poverty line.

As the global financial crisis deepens, China is not immune. Its GDP growth slowed to 9 percent last year compared with an annual 13-percent increase in 2007.

Exports, one of the bedrocks to fuel China's high growth in recent years, plunged 17.5 percent year-on-year in January and a bigger 25.7 percent in February because of weakening external demand.

The falling exports have led to slowdown in industrial production, factory shutdowns and rising unemployment.

All the difficulties and uncertainties have prompted the Chinese government to stimulate the economy with a series of aggressive measures since late last year. These included a 4-trillion-yuan stimulus package, a plan to expand rural home appliance purchases and support plans for key industries.

Undoubtedly, China's stable and fast growth would contribute to the world economic recovery. However, it's not realistic to expect too much from the country in terms of dealing with the crisis, or even count on China to pull the world out of recession. It's similar to charging a colt with an overwhelmingly big carriage and hoping it to drag the cart along.

As prominent Chinese economist Fan Gang put it, as a developing country, China's economic recovery will have positive, but limited, affect on the world economy, which will pull out of downturn only after the recovery of major economies.

China is facing "unprecedented difficulties and challenges" this year, as stated by Premier Wen Jiabao in his government report delivered to the National People's Congress last month.

Wen told the Financial Times newspaper, "I firmly believe that running our own affairs well is the biggest contribution to entire mankind."

Likewise, maintaining China's sound economic growth is in itself a major contribution to global financial stability and economic rebound.

When speaking of running its own affairs, China does not mean protectionism or limited trade cooperation.

To demonstrate its opposition to trade protectionism, the Chinese government sent Chinese companies on procurement missions to Europe and made purchases worth $13.6 billion.

In an effort to offset the waning exports, China is striving to enhance domestic consumption, especially consumption in the rural market. The benefit, however, will not only go to China, but also foreign investors and the whole world.

Unlike the US and some European countries, who invested hefty money to rescue the ailing financial sector, China's 4-trillion-yuan spending is invested in the real economy to improve people's livelihood, which, in turn, also provides access for foreign investors to the huge market.

China's stance proceeds from the country's actual condition. It should be obvious to anyone who does not take a distorted view of China. Managing well its own affairs first will help, but not deteriorate, the current situation -- which should be the basic requirement for every major economy.