At a panel in Washington on Tuesday, specialists on the Chinese economy spoke positively about Beijing's apparent determination to shift more toward domestic consumption to reduce its reliance on exports.
Economist Wing Thye Woo of the Brookings Institution and the University of California, Davis told the government-funded U.S.-China Economic and Security Commission that China's growth rate is slowing, but not as much as some forecasters say. Wing said China's economy is likely to grow by some 8 percent this year - more than the 6.7 percent predicted by the International Monetary Fund.
"In my opinion, the outcome will most likely be closer to what Premier Wen [Jiabao] said [at Davos, eight percent] than what the IMF forecasts," he said.
Wing said Chinese economic growth will persist mainly because banks have been ordered to boost lending to enterprises.
Nicholas Lardy, a China specialist at Washington's Peterson Institute for International Economics, agreed that China is boosting its domestic growth to compensate for the export slowdown caused by recession in North America and Europe.
Lardy said that because of reduced exports, China's huge surplus with the rest of the world will diminish.
"Their current account surplus, as a share of GDP [gross domestic product], will shrink further," he said. "It did shrink a little last year. And I believe it will shrink more this year. So there is some rebalancing going on."
The 12-member U.S.-China Economic and Security Commission set up in 2000 to monitor American and Chinese economic and security relations, and to make recommendations to Congress. Some commission members suggested on Tuesday that China's undervalued currency and huge trade surplus contributed to the financial crisis that began in the United States some 18 months ago.
That assertion was sharply rejected by China expert Stephen Roach, who directs Asian research at the investment bank Morgan Stanley.
"The Chinese had nothing to do with enticing Americans to make the dumbest mistake they have made in the history of U.S. household finance: over-indebting themselves at a time of low interest rates and assuming that house prices would go up forever, and that interest rates would stay low forever," he said.
Another expert at the commission's Capitol Hill panel was former U.S. trade negotiator Robert Cassidy. He said that America is likely to continue to rely on China to finance its trade deficit.
"We need to borrow the money from somebody. So where is that money going to come from? With China having a 50 percent savings rate, maybe that is the solution. Maybe an undervalued [Chinese] currency is going to be part of the equation for a while," he said.
China, followed by Japan, is the largest purchaser of U.S. government debt.
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