China’s Contribution to World Economy Around 30%

Though China’s economy is currently witnessing a slowdown, the contribution of the world’s second largest economy to global growth will remain around 30% for the next five years, a top Chinese economist says.

The transition of China’s economy will become an important driver of world economic growth, according to Chi Fulin, director of the China Institute for Reform and Development, PTI reported.

Addressing the China reform forum that opened in the southern Chinese city of Haikou Saturday, Chi said the contribution of China to the world economy will remain around 30% for the next five years.

He predicted that in the next few years, the global economy will grow slowly while seeking a new balance, bringing impact on the transition of China’s economy, state-run Xinhua news agency reported.

On the other hand, as the world’s second largest economy, China’s economic transition and growth is increasingly influencing the world economy.

“It is estimated that the contribution of China’s economic growth to the world economy is expected to maintain at 25-30%, Chi said.

His comments came amid global concerns following rapid slowdown in Chinese economy from double-digit growth to quarter century lows last year of less than 7%.

As per official figures, China last year slipped to 6.9% and the government has fixed the target between 6.5% to 7% for this year with an official rider that it will not be easy to achieve.

 Australia Worried

China’s growing debt mountain poses a risk to Australia’s financial stability, a senior Australian politician has warned, just weeks after the continent celebrated a quarter century of growth without a recession.

China is Australia’s largest trading partner, accounting for A$150 billion ($113.98 billion) of two-way trade in 2015. Beijing is also an important foreign investor in Australia, leaving Canberra potentially among the developed nations most exposed to a Chinese downturn. China’s growing debt in its local government and state-owned enterprise sector were potential vulnerabilities that could end up having an impact on the continent, Scott Morrison, Australian treasurer, said in an interview with the Financial Times.

Australia’s warning on Chinese debt follows concerns expressed by the International Monetary Fund and others, including billionaire George Soros, who have warned that adverse shocks in China fuelled by its rising debt levels could spark contagion and hit countries with a high trade exposure to the country.

Recent figures showing China’s economy grew 6.7% in the three months to end September suggested there was no immediate risk, Morrison said, adding that it was important for Canberra to consolidate its budget deficit in the next five years to build up resilience.