Asia’s growth out­look is bright

China Daily (Canada) - - XI’S VISIT - By AGEN­CIES in Bangkok andDavos, Switzer­land

China is shift­ing from ex­port-ori­ented growth to tap­ping do­mes­tic de­mand

A United Na­tions re­port said Asia’s eco­nomic out­look for this year is strong, de­spite slow­ing global growth due to slug­gish in­ter­na­tional trade and in­vest­ment.

The world econ­omy grew 2.2 per­cent last year, the slow­est pace since the end of the 2008 fi­nan­cial cri­sis. Bri­tain’s plan to leave the Euro­pean Union and the elec­tion of Don­ald Trump as US pres­i­dentareadding­tounc­er­tainty.

De­spite a slow­down in China, Asia re­mains a “bright spot”, the au­thors of the UN Eco­nomic and So­cial Com­mis­sion for Asia and the Pa­cific said in the re­port, re­leased on Tues­day.

Strong con­sumer de­mand and gov­ern­ment spend­ing helped make up for weak ex­ports, as East and South Asia grew at a steady pace of 5.7 per­cent last year, level with the year be­fore.

“Most economies in East Asia and South Asia, led by China and In­dia, saw ro­bust growth driven by strong ex­pan­sion of do­mes­tic de­mand,” the re­port said.

South Asia is the world’s fastest-grow­ing re­gion, with 6.7 per­cent growth this year pro­jected to reach 6.9 per­cent next year and in 2018. In­dia’s econ­omy is pro­jected to ex­pand by 7.7 per­cent and 7.6 per­cent this year and in 2018, re­spec­tively. Since its ex­ports are small rel­a­tive to the size of its econ­omy, In­dia is largely in­su­lated from global trade volatil­ity.

China is mak­ing progress in shift­ing from ex­port-ori­ented growth to tap­ping do­mes­tic de­mand, the re­port said. It es­ti­mated the Chi­nese econ­omy grew 6.6 per­cent last year, de­spite a 6.8 per­cent con­trac­tion in ex­ports for the year, as re­ported by the gov­ern­ment.

Ser­vices are grow­ing in im­por­tance in China, ac­cord­ing to Som­pobMa­narangsan, an eco­nomics pro­fes­sor at Thai­land’s Chu­la­longkorn Univer­sity. “There’s still quite some room for China to fur­ther de­velop by us­ing its own do­mes­tic de­mand,” he said.

Trump has railed against ex­ist­ing free trade agree­ments and threat­ened to im­pose puni­tive tar­iffs on some im­ports at a time when Asian economies have been grad­u­ally com­mit­ting to wider open­ing of their own mar­kets.

Som­pob said China looked set to counter pro­tec­tion­ist moves, given its stake in global trade.

“You see Xi Jin­ping, the pres­i­dent of China, go­ing to joinDavos toshowhow­much he sup­ports the mar­ket­based econ­omy,” Som­pob said, re­fer­ring to the an­nual World Eco­nomicFo­rum­gath­er­ing of global po­lit­i­cal and eco­nomic lead­ers in Switzer­land this week. “China from now on is go­ing to per­form against what Don­ald Trump is go­ing to do.”

Xi, the first Chi­nese pres­i­dent to at­tend Davos, said in a speech on Tues­day that any moves to turn back to pro­tec­tion­ism will run against his­tor­i­cal trends.

“Whether you like it or not, the global econ­omy is a big ocean that you can­not es­cape from. Any at­tempt to cut off the flow of cap­i­tal, tech­nolo­gies, prod­ucts, in­dus­tries and peo­ple be­tween economies, and chan­nel the wa­ters in the ocean back into iso­lated lakes and creeks is sim­ply not pos­si­ble.” Xi said.

There’s still quite some room for China to fur­ther de­velop by us­ing its own do­mes­tic de­mand.”

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