The nation will continue to play role as economic engine, says UN
BEIJNG - Despite registering a slowdown, China's growth will play an increasingly important role in the global economy, as forecasts suggest the world is on the verge of another major downturn in 2012, according to experts.
A report by the United Nations, released on Tuesday, put the outlook for global economic growth at 2.6 percent this year and 3.2 percent for 2013, as compared with 2.8 percent seen in 2011.
However, the forecast is conditional on containment of the eurozone debt crisis and a halt to further moves toward stringent fiscal austerity in the developed countries.
"In an alternative scenario, if the policymakers in Europe and the United States fail to address job crises and sovereign debt distress, growth would decelerate to 0.5 percent in 2012," the report said.
Developing economies will continue to stoke the world's economic engine, but the growth rate in 2012 and 2013 will be well below those of the previous two years, it said.
The UN report gave China's economic growth a positive forecast of 8.7 percent for this year.
The country's key 2011 economic figures, released on Tuesday, show that fourth-quarter GDP growth slowed to 8.9 percent from 9.1 percent in the previous quarter.
The figure was the slowest rate of growth since the second quarter of 2009, but was still slightly stronger than the prediction of 8.7 percent made by a number of analysts.
"Growth close to 9 percent for the world's second-largest economy was absolutely good news for a global economy on the edge of a double dip (recession)," said Wang Tongsan, a senior researcher at the Chinese Academy of Social Sciences.
Wang admitted that a further slowdown in China's growth may drag on countries such as the US and Germany, which are counting on exports to China for their own recovery.
Meanwhile, a weakening export volume from China may lead to fewer imports from commodity-based countries, such as Brazil and Australia.
However, China's better-than-expected growth rate should boost confidence in the prospects for the global economy, Wang said.
"Meanwhile, let's not forget that the growth was achieved under a domestic environment of policy tightening," said Zhu Baoliang, a research fellow with the State Information Center.
Zhu suggested that an easing of those measures, a highly probable scenario, will restore growth as inflation retreats.
China is now the largest contributor to global growth, according to a recent report from JP Morgan Chase & Co. In 2011, the country accounted for nearly 12 percent of aggregate global GDP and more than one-third of its growth.
"As the economic woes in a number of developed countries drag on the global economy, China's contribution to global GDP growth is like to increase further," Zhu said.
He added that global trade imbalances should no longer be a major concern for policymakers. Instead, there should be more stimulus policies conducted under coordination on the international level to boost growth.
"The current policy responses to the global downturn are highly inadequate, because developed countries have phased out stimulus measures while the unemployment rate remains high," said Rob Vos, an analyst with the UN's economic and social affairs department.
Vos suggested that the US and Europe should launch short-term stimulus policies to boost demand and reduce unemployment, which would also provide time for China and the other Asian economies to restructure toward a greater reliance on domestic demand.
If global coordination is conducted effectively and political disputes were to be resolved, the global economy may grow by 3.9 percent in 2012, Wang said.