Multinationals should help China restructure: Expert
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With economists urging China to update its growth model, government, business and researchers met at the 8th Transnational Corporations China Forum on Tuesday to discuss how multinationals can contribute to the process.
China's economy grew 8.7 percent last year despite the international financial crisis. According to Zheng Xinli, Vice Chair of the China Center for International Economic Exchanges, China has accounted for more than 20 percent of world economic growth over the past two years.
The consensus at the forum was that China will continue to be the major driving force for growth.
"It has been proved that countries and companies will achieve fast growth if they have a big presence in the China market," said Zheng.
Zheng is upbeat about the recovery of China's foreign trade. He said the country's trade will rebound to its 2008 level this year after a 13.9 percent fall to 2.21 trillion US dollars in 2009. In 2008, China's foreign trade grew 17.8 percent to reach 2.56 trillion US dollars.
Transnational companies need to seize the opportunities presented by China's efforts to change its growth pattern, Zheng said.
The global financial crisis exposed China's overdependence on exports and the government is speeding up economic restructuring in search of more sustainable growth, he said.
One of the government's priorities is expanding domestic consumption. Zheng said transnationals should support this trend by developing products to suit China's multi-layered market.
Another growth area for transnationals is China's service industry which is set to get strong support from the government, said Zheng.
China's tertiary industry accounts for 42 percent of GDP, compared with a world average of 67 percent, and 70-80 percent in developed economies.
Zheng said transnational corporations should step up investment in urban infrastructure and public services as urbanization accelerates.
"Urbanization will create enormous demand," said Zheng. He expects China's urbanization rate to grow by 1.4 percentage points each year until 2030, by which time 70 percent of the country's population will be urban residents.
Zheng also urged transnational corporations to set up R&D centers in China to help shift the country from heavy consumption of energy and resources towards an industrial structure based on innovation.
Executives of transnational corporations expressed their commitment to the China market and talked of China's rising importance in the global economy.
"Transnational corporations need to play a positive role in China's economic restructuring," said Chen Liming, President of BP China. "We need to seek fresh growth areas in China's new development initiatives and become 'localized' transnational companies."
