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China faces 2 key challenges: DPM Tharman

It must handle changing role on world stage and economic transformation

Published on Oct 25, 2012 6:00 AM
 
Compared to the past three decades when the country was a major supplier of a large pool of low-paid but relatively efficient workers, Chinese demand will play an increasing role in the global economy, said Mr Tharman. This will have a significant impact on producers and the rest of the world. -- PHOTO: AGENCE FRANCE-PRESSE

China faces two major challenges as it readies itself for a new leadership that will have an important impact on the global economy, Deputy Prime Minister Tharman Shanmugaratnam said.

The two inflection points are China's domestic economic transformation and its changing role on the global stage, Mr Tharman, who is also Finance Minister, told a public forum on Wednesday.

Explaining the importance of China to the rest of the world, he said the world is now more dependent than ever on China as a source of demand and investment. The international community is also more dependent on China in preserving a stable economic and monetary order.

China, on its part, is seeing a major shift in its domestic economic model from one that focused on capital accumulation to one that focuses on capital efficiency and on consumption as a driver of growth.

 
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I suspect what happens on Nov 8 will matter more (for the world) in the coming years than what happens on Nov 6.

- DPM Tharman, referring to the Chinese Communist Party Congress and the US presidential election respectively