Economy
China opportunities, challenges for Europe
(Xinhua)
Updated: 2010-10-27 16:20
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BRUSSELS - China's next five-year plan would mark a further step in rebalancing the world's second largest economy, which presents both opportunities and challenges for businesses in the European Union (EU), an expert said on Tuesday.
"There is a focus on continuing reform. There is a lot of talk about the need to rebalance the economy and to rebalance development in China. That is the most important element of the five-year plan," Duncan Freeman, a research fellow at the Brussels Institute of Contemporary China Studies, said in an interview with Xinhua.
Leaders of the Communist Party of China (CPC) wrapped up a crucial meeting last week with a draft plan of the country's economic development strategy in the next five years, under which China aims to build a sustainable and green economy by boosting domestic demand and investing in clean technologies.
Freeman, who has been following China's economic policies and its relations with the EU for years, said the new five-year plan would be a step forward in Beijing's quest for a more sustainable and inclusive growth.
"There have already been policies in place in China on a lot of issues, such as social welfare and consumption. What is now being talked about in preparation for the five-year plan is that rebalancing of the economic development model in China will be tackled in a much more coherent and comprehensive way," the Belgian expert said. "This will be a fundamental part of the economic policy in China."
According to Freeman's observation, there are two major fronts in China's ongoing efforts to rebalance its economy. One is to shift away from the export-driven growth to a more sustainable model relying more on domestic consumption, while the other is to strike a right balance between economic growth and environmental protection.
As one of the major targets set for China's economic and social development in the next five years, CPC leaders have called for a universal increase of people's income at a relatively fast pace, which analysts say shows China's determination to promote income distribution reform and accomplish the goal of enriching both the people and the country.
"There is obviously a lot of talk about the need to increase domestic consumption by raising the income levels of people in China and developing a social welfare system," Freeman said.
But the expert warned that the transition would not be easy.
"It is not something that is going to happen very quickly. It is something that will take many years to really produce fundamental results," he said.
Freeman said the new five-year plan would also put the Chinese economy on an environment-friendly path, and in the meantime, green economy would be a key driver for the country's future development.
"Certainly, the Chinese government has already begun to focus investments on green technology. This has become a big part of China's economic development plans," he said. "The Chinese government sees this as an opportunity for China, not necessarily a cost for the Chinese economy."
By boosting domestic demand and developing green economy, China holds potential for EU businesses, which have already been deeply engaged in the world's most dynamic market, Freeman said.
"Increased domestic consumption in China and continued economic reforms in China present opportunities for European businesses either to invest in China or to export to China," he said, adding more and more Chinese people would like to buy high-end and usually more expensive European products.
But the EU is also concerned about increasing competition from China as the Chinese companies are getting more sophisticated in green technology. "There is also an element in some of these plans of potential competition," Freeman said.
"China wants the technology and certainly will import some of this technology, but it is quite clear that China also wants to be a global leader in this sector."
"So there is going to be an opportunity and a potential competition," he added.