Wen Jiabao: China GDP Growth Will Continue Despite Global Slowdown

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Tianjin Davos Forum Upbeat, 2009 growth rate expected to be 8.5 percent

Sept. 28 – China has passed many difficult tests during 2008 and now has full confidence and the capability to overcome various difficulties to ensure sound and fast economic growth for an even longer period of time, said Premier Wen Jiabao yesterday at the Tianjin Summer Davos Forum, according to China Daily.

Those comments are borne out by a survey conducted by China Briefing amongst international and Chinese financial institutions that indicated that China’s grow was likely to fall to 8.5 percent during 2009, a full percentage point lower than 2008. However, it was noted that infrastructure development, particularly in Beijing prior to and during the Olympics may have added a one percent growth for this years figures, meaning that China’s true growth was on course for a consistent 8.5% performance and that next year, despite severe uncertainties in the United States and Europe, would be one of similar performance to 2008.

“There are many favorable conditions for China to maintain sustained and fast growth, such as abundant supply of labor and capital as well as huge potential of increased domestic consumption and investment demands, vast market and more competitive and dynamic enterprises,” said Wen in his speech.

Global concerns were “Difficult” but “Unlikely to result in a global economic recession” said PricewaterhouseCoopers Chief Executive Officer Samuel Dipiazza. “We are currently at a very difficult spot, but global economic recession is not likely, even though there is a world economy slowdown, because some emerging markets, including China and India will keep driving the growth.”

That position was echoed by Deloitte Touche Tohmatsu chief executive officer James Quigley, who mentioned “Individual industries in individual markets are going through a contraction, but as for the global economy overall, recession is not happening.”

Fred Zuliu Hu, chairman of Greater China, Goldman Sachs (Asia), said at a different session on Friday the global credit turmoil would not have a major impact on China’s financial sector due to limited exposure of Chinese lender to the risks.

Chris Devonshire-Ellis, Senior Partner of Dezan Shira & Associates comments that the situation in the Unites States reminds him of the Asian Financial Crisis several years ago, and that although regionally there had been damage and consequent financial reform, a global recession had not occurred at that time. He also recalled how in Asia, foreign investment had dried up “mainly due to currency speculators” but that on this occasion of U.S. economic damage his firm had seen no evidence of a slowdown of either United States or European investment into China, adding that he thought the position taken by the EU Commissioner Peter Mandelson a few days ago was flawed because, “China has grown a lot over the past 15 years and it cannot sustain such a rapid pace of change as its economy grows, and the fundamentals have changed.”

The general feeling at the forum has been that economic damage is limited to the United States and Europe and that the main Asian economies of Japan, China, India and the Emerging markets of Russia, Brazil and smaller dynamic nations would stave off a global downturn, and that there would be little change in China’s economic outlook for 2009 despite U.S. problems.