World economy needs utterly a rebalance, China plays a vital role

The world economy sees a serious imbalance at present, much more serious than any other time ever since World War II, therefore it needs extremely a process of rebalance, in which China plays a vital role, Morgan Stanley chief economist Stephen S. Roach said recently in Shanghai.

To realize the rebalance of the global tilted economy, except for the US Reserve to make adjustment by raising its actual interest rate, and with the adjustment to be made by Europe and Japan for pulling along the internal needs, the role played by China is also of great importance, he analyzed. Take China's currency policy for instance, it has now become a focal point in the world financial market. In view of the role played by China which is becoming more and more important in the world, any choice by China in this respect will exert a very big impetus on the whole globe and it looks as likely as not that it is going to be at the helm of the world financial market, and eventually determines the progress of the rebalance of the global economy.

As the relevant statistics indicate, the growth of industrial production in China witnessed an astonishing re-accelerated trend in the first two months of 2005. As against the daily average growth rate of 8.9 percent in January, the average growth rate of 16.9 percent in January to February is even more eye-catching. In 2004, the Chinese economy seemed to have entered into a track for a stable slowdown, held Stephen S. Roach, yet it saw a sudden speedup at the beginning of 2005 in which industrial activities became once again revitalized. And so China has to strengthen its macro-control measures and at present, departments of the Chinese government have already started an active work in this respect. Therefore, he is of opinion that in the months to come the once again slowdown of industrial activities and the possibility for the decrease of price hike will be relatively enhanced.

He pointed out that China is in the slowdown period for its economic growth. As a foreteller for economic growth, he has always held a sanguine attitude towards the economic development in China over years in the past and up to now the point of view remains unchanged. Though the high-speed development of the Chinese economy in the recent period made him feel astonished he still believed that the Chinese government could manage to realize an effective slowdown for getting a sustainable development, thereby obtaining its long-term objective. Besides, Stephen S. Roach said, in the Chinese real estate market and some other sectors, Morgan Stanley Funds Co. has quite some invested items and the periodically appeared bubbles will not affect its confidence in the Chinese market.

By People's Daily Online