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Talk of shifting source of growth not enough: Economist

Updated: 2012-12-13 13:27
By Zheng Yangpeng (China Daily)

Too many businesses in China are still reluctant to give up their reliance on exports, despite the government's calls for a more domestic-driven economy.

Talk of shifting source of growth not enough: Economist

That's according to Michel Chossudovsky, a professor in economics at the University of Ottawa, who also thinks that owing to its huge production base and to slowing economies elsewhere, the country is already the world's biggest economy.

In an interview with China Daily, Chossudovsky said much has been written about how the bleak economic conditions in Europe and the US have provided an impetus for China to shift from export-driven toward domestic-driven growth.

But he said the more underlying reason is that China's trade with the West remains unfairly priced, and "unequal".

To re-balance that, and to encourage the shift in economic priority away from exports, he suggested that the Chinese government increase the purchasing power of its population by raising wages by at least 10 percent.

He also said that more effort should be given to negotiating what he would consider to be fairer factory prices in the country, and elsewhere in Asia, compared with the West.

The author of many books on globalization, Chossudovsky said the current political rhetoric in the US is that China is "stealing" US jobs.

"But that's just not true," he said. "China is not stealing jobs. It is US business that's losing jobs.

"The industrial base of the US is declining because factories from California to Connecticut are closing down, and business people are now choosing to subcontract those jobs to China," he said.

"If you look at the Western economies, especially the US, they are very fragile.

"They are highly dependent on China, to an extent that people there don't realize," said the much-traveled professor.

In recent months, various economic and commercial organizations have predicted when China will become the world's largest economy.

This week, for instance, the US Intelligence Council said in a report that it expected China will "probably have the largest economy in the world, surpassing that of the US, a few years before 2030".

Earlier this year, the OECD and IMF both suggested that would be 2016, while global banking groups Citigroup Inc and HSBC Group have suggested it will happen 2020-2022.

But Chossudovsky thinks that given the size of its massive production base, China is already the world's largest economy, as countries in the West continue to struggle.

But he insists that based on his international research and experience, it is obvious that China's trade with the West is, in essence, "unequal".

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