Special Report:Global Financial Crisis
By Liu Hong
WASHINGTON, Oct. 17 (Chinese media) -- China's development is crucial to the world economy
and will help the developed economies and the world as a whole to stave
off the possible recession, a leading U.S. economist told Chinese media in a recent
interview.
CHINA IS THE MOST OPEN DEVELOPING ECONOMY IN THE WORLD
"China, certainly by far the world's economy main drive... is accounting
(for) about 1 quarter of total global economic growth,"said Fred Bergsten,
director of the Peterson Institute for International Economics (Peterson
Institute), a top U.S. think tank.
"I think China's own rapid growth will continue and that will provide a
major impetus to the world's expansion that will help the U.S., west Europe and
other slowly growing parts of the world drop out the recession," he said.
Bergsten, who first visited China some 20 years ago, has been to the
country about a dozen times and was deeply impressed by theprogress China has
achieved since its reform in 1978.
"The progress I have seen in China by my own eyes was more dramatic than
I've seen in many other countries in the world," said the economist, who served
as an assistant secretary of the U.S. Treasury during 1977-1981.
He said many of his colleagues in the United States have erroneously viewed
China as a closed economy setting lots of tradecontrols and blockages for
foreign investment.
However, he believed that China is the most open developing economy in the
world, more open than many industrialized economy. "That is important because
China chose consciously to integrate with world as a development strategy,"
Bergsten said.
According to him, China joined such international organizationsas the WTO
partly to promote the country's internal reform, further its development as well
as modernize its economy.
"I think China's trade policy strategy toward global engagementis
brilliant," said Bergsten.
PROTECTIONISM AGAINST CHINA INTENSIFIED AMID GLOBAL ECONOMIC SLOWDOWN
As the current financial crisis causes a sharp slowdown in the U.S. economy
and a severe decline in the world growth, China also feels the impact of the
financial tsunami.
"Many factories closed in China, many factories closed in the United States
and everywhere, that's the process of market-based economy," said Bergsten.
He pointed out that some Chinese factories have gone bankrupt as the the
Chinese yuan exchange rate started to rise, which is asinevitable as the
economic slowdown in the U.S.
China is reducing its huge trade surplus and begins to rely more on its
domestic demand, which the economist believed is a natural and desirable
adjustment process for the country.
He said that China was too dependent on growing trade surplus in the last
few years, which was "unsustainable."
As the world economy wrestles with financial turmoil, China also faces
challenges in its export. And Bergsten predicted that "reaction against China
will be intensified".
When asked about his opinion towards the current crisis, Bergsten responded
quite optimistically. He said that although thecurrent financial crisis is very
serious, yet, it does not always lead to economic crisis.
He believes that the U.S. economy, at least for now, has avoided a
recession, and the bailout plan proposed by the U.S. government and passed by
the congress will work.
Bergsten was also very optimistic about the future of China. "Ithink China
has enormous possibilities for continued rapid economic growth, and I expect
another 30 years of very positive progress in reducing poverty, increasing
living standards, continued rise of China," he said.
UNITED STATES, CHINA SHOULD STRENGTHEN HIGH-LEVEL COOPERATION
Bergsten believes that the rise of China poses both challenges and
opportunities to other countries.
"China's rise is clearly a very good thing to the world, a goodthing for
the United States," which means the U.S. is now dealing with a more developed,
more sophisticated and more mature China.
"China plays a major role in the world's economy," said the director of the
Peterson Institute, "It's very hard for any country developed so rapidly to
integrate into the global order, and also to realize its own responsibilities
for helping to assurea stable, constructive and prosperous global economic
system."
Bergsten proposed a high level of cooperation between the United States and
China.
He believes the Sino-U.S. relationship is the most important bilateral ties
in the world. And it is crucial for both sides to resolve disputes in an
effective and cooperative way whenever theyarise, he said.
"That's why I believe the U.S. and China should put a mechanismin place
including annual summits of our two governments," he toldChinese media, indicating the
two countries should create a dispute-settlement framework.
Bergsten, who was listed as "one of the 10 people who can change your life"
by USA Today, predicted that the next U.S. president would approach the
country's relations with China probably like the last two presidents.
He explained that both President Bill Clinton and President George W. Bush
had talked about big changes in policies toward China before they were sworn in.
But the reality was that both carried out policies largely contradictory from
what they had saidin their campaigns.
That was because "the interest of the U.S. and global position of
China" are the larger factors to determine the two countries' relations, he
noted.
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