02/02/2010 - With the help of massive government stimulus action, China is now leading the world economy out of recession, according to a new OECD report. Already the world’s second largest economy, China could well overtake the United States to become the leading producer of manufactured goods in the next five to seven years, it says.
The OECD’s latest Economic Survey of China says it will be important to ensure that government saving, now falling in the wake of the crisis, does not revert to its previous, excessively high levels. Public spending should be stepped up to support much needed social reforms in areas such as education, welfare assistance, pensions and health.
China can afford the extra spending as its public finances remain strong. Gross government debt amounted to only 21% of GDP in 2008. The stimulus measures, which nevertheless dwarfed those of other countries, are expected to increase this debt ratio by only 3% of GDP in 2010. By contrast, gross public debt in OECD countries is projected to almost reach their total GDP this year and even exceed it in 2011.
Speaking at the launch of the survey in Beijing, OECD Chief Economist and Deputy Secretary General Pier Carlo Padoan said; “The Chinese government’s swift and vigorous action to support its economy has contained the impact of the global recession.
By helping to rebalance China’s economy towards stronger domestic demand, the stimulus is also benefitting the rest of the world. Further stepping up of social spending in China will be important both to foster social cohesion domestically and to promote continued external rebalancing.”
Even though government reforms have focussed increasingly on the need for social cohesion over recent years, the survey identifies a number of areas where action is needed for living standards in China to continue to improve over the longer term:
China and the OECD work in close partnership on a number of projects through the Organisation’s Enhanced Engagement initiative, in which Brazil, India, Indonesia and South Africa also participate. The peer review process behind the OECD’s economic surveys is a key part of the Organisation’s contribution to the G20’s Framework for Strong, Sustainable and Balanced Growth.
>> Further information is available from www.oecd.org/eco/surveys/china
>> The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.
>> Journalists can obtain a copy of the OECD Economic Survey of China, from the OECD’s Media Division (email@example.com; tel + 331 4524 9700)
>> More information on OECD work with China is available from www.oecd.org/china
How to obtain this publication
The complete edition of the Economic Survey of China is available from: