By John Chan
The World Economic Forum held in the Chinese city of Dalian on September 10-12 was attended by 1,400 business leaders, government officials and economists from around the world. Known as the annual “Summer Davos”, the gathering is testimony to the growing international focus by the world’s ruling elites on China as the prime engine of economic growth.
The Dalian forum started in 2007 as a supplement to the main World Economic Forum in Davos, Switzerland. The themes—“Shifting Power Equation” in 2007, followed by “The Next Wave of Growth” and this year “Re-launching Growth”—all underline the economic rise of China and its importance to global capitalism.
However, the reality is that China, despite its continuing growth, is beset by economic problems of its own. In his opening speech, Chinese Premier Wen Jiabao explained: “China’s economic rebound is unstable, unbalanced and not yet solid.” He pointed in particular to the “tremendous pressure” on China produced by the continuing global decline in demand for its exports.
Many economists expect that China will achieve this year’s government target of 8 percent growth. At the same time, however, most of that growth is directly attributable to Beijing’s huge 4 trillion yuan ($US585 billion) stimulus package and a massive surge in bank lending ($1.1 trillion in the first half of the year). Such measures are simply unsustainable in the long-term.
Wen emphasised that the government’s priority was to maintain social stability by “taking all possible steps to expand employment.” A recent report by the Chinese Academy of Social Sciences found that 41 million workers had lost their jobs since the global financial crisis erupted last year—equivalent to 40 percent of the world’s total job losses. Of those who lost their jobs, 23 million were still out of work. Earlier figures released in August put job losses at 16.5 million.
Many CEOs, however, are banking on continued high growth rates in China. The so-called recovery being touted in the financial press of Asian economies, including Japan, South Korea and Taiwan, is largely based on increased exports to China. The Australian economy has been able to avoid a technical recession only as a result of continuing huge sales of raw materials to China.