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WB: A rapidly growing China to be "very positive force for Asia"
( 2001-06-13 20:40 ) (8 )

A rapidly growing China will be "a very positive force for Asia as a region," a high-ranking World Bank official said in Bangkok Wednesday.

Homi Kharas, acting chief economist and director of poverty reduction and economic management for east Asia and Pacific region, told a press conference that ASEAN countries' exports to China have been growing rapidly and "it's going to become even more rapid" with China's WTO accession.

So China will be a very positive force for all the economies in the region, he said.

Denying that the foreign direct investment flowing to China has increased dramatically after the Southeast Asian financial crisis, Kharas said, "we haven't seen any marked increase in the amount of foreign direct investment that is flowing to China as a result of after the crisis."

"The amount of foreign direct investment that is now going to China is more or less proportional to China's share to total economy of this region. We don't see it being an unusually high amount. We don't see it as being an unusually low amount."

He urged Asian countries to improve their competitiveness in the globalizing world instead of worrying how much impact China's WTO accession will have on their economies.

Kharas said competitiveness refers to the use of new technology, need for skilled development both in terms of labor force and higher education, various kinds of logistics, the way in which industries and corporates develop global strategies rather than national strategies and position their products in a global value-added chain and in a competitive way.

"That is the kind of change of mindset we are talking about. That is going to be a function of globalization, of which China's WTO accession is one part," said the economist.

He also pointed out that quite a lot of foreign direct investment to China was from ASEAN countries. "It is actually helping to strengthen the position of these companies, and it is part and parcel of the kind of more global strategies that these corporate are taking."

Since healthy domestic corporates are obviously good things for ASEAN countries, the fact that the foreign direct investment going to China does not necessarily mean that this is a bad thing for ASEAN countries.

He also spoke highly of China's poverty reduction achievement, saying that the reason that Asia's poverty levels now are much lower than they were before the crisis is that the strong performance of China throughout the crisis.

The poverty reduction achieved by China offset the increase of poverty occurrences in other countries in the region, said Kharas, adding that the poverty incidence rates will return either this year or next year to pre-crisis levels with the possible exception of Indonesia.