CHINA was being transformed from a labor-intensive to a capital-intensive economy, which would benefit the country and the rest of the world, a U.S. expert said.
It s actually a process that is underway right now, Bernard Baumohl, chief global economist at the Princeton, N.J.-based Economic Outlook Group, was quoted as saying by Xinhua News Agency over the weekend.
In other words, it is a mistake for people to believe that all that China produces are cheap consumer products or industrial raw material.
Baumohl believed China would achieve its goal to transform its economy, and to that end it would shift the structure of the economy and move away from exports to more domestic consumption.
When you combine rising wages and a rising currency, it can create problems for exports. So it s important that China shifts from a labor-intensive economy to a capital-intensive one, he said.
And China has to shift some of its manufacturing facilities out of the country.
Baumohl said he believed China would continue to play an important role in propelling global economic growth.
He estimates global growth will be about 3.7 percent this year and will increase to 4.2 percent this year and 4.6 percent in 2012.
Baumohl commended China for successfully handling the global financial crisis.
China has actually done much better during this global financial crisis and international recession that we saw. While the United States and much of the rest of the world had a recession, China was still able to grow at a fairly healthy rate, he said.
One of the reasons for that was there is not much internal debate like we often see in the West, he said.
In China, policies to keep the economy out of trouble are implemented very quickly. This has served China very well because they have been able to avoid recession and particularly avoid some of the harm and devastation caused by the global economic downturn and the financial crisis.
Historically, Chinese policymakers have successfully steered China away from several global economic storms, such as the Asian financial crisis and the Russian debt default, Baumohl said.
All of these in many ways hurt some of the major global economies but China has been able to avoid that kind of fate. (Xinhua)
