Concerted 'exit strategy' worldwide essential to global recovery
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A concerted "exit strategy" by the world's governments was essential to global recovery, Robert Wihtol, country director for the Asian Development Bank in China, told Xinhua in an exclusive interview.
"Global crisis has highlighted the fact that different economies are interlinked and interdependent and that globalization means countries grow and develop together. It also means the effects of a crisis are magnified because economies are intertwined," Wihtol said.
"It is very important to look for solutions together, because what happens in one country affects other countries," he added.
Terming President Hu's message as "very important," Wihtol said solutions have to take into account the interlink nature of different countries and economies.
On world economy's performance in 2009, Wihtol said "the stimulus package has been effectively implemented in 2009 and stimulus spending will be extended in 2010."
However, what's more important in 2010 was how to implement "exit strategy," which would be among top priorities on governments' agenda, he noted.
"It is also the professionally most interesting question that just comes out for economists. The world at the moment is experiencing more stimulus expenditure than any time in the past. The next step is going to be how different economies can move on from stimulus packages to exit strategies in the correct way," added the economist.
Wihtol said while people generally believed it was still too early to stop stimulus spending, there was clear agreement that we need to follow the situation closely in the 2010 to make sure that stimulus spending would not go on for too long.
"We need to monitor the side effects of stimulus spending and to put in place appropriate policies that would allow for sustainable growth after the stimulus," he said.
As suggestions for China, Wihtol said China should gear up for development in technology, high value-added services, financial sector, telecommunications, retail and tourism.
"Export industries have shed jobs very quickly, more quickly than they would have under other circumstances. It highlighted the need for China to retrain and redeploy a very large segment of work force," he said.
Services in particular are important because they are more labor intensive and can create jobs. "And vocational education and training are going to be key in this. It would be very beneficial to migrant workers," he added.
For longer term, Wihtol said China should make efforts to reduce people's saving rate, by "increasing social expenditure and strengthening the educational, health and pension system."
"At the moment, China's total expenditure in these three areas (individual, corporate and social expenditures) is a little bit over 6 percent of GDP. An average European economy is something like 20 percent," the economist said.
"It is very important for the Chinese government to set a clear target for gradual sustained increase of social expenditure, not one-time commitment, but continuous over the next sustained period to support these development," said Wihtol.
As for cooperation between the ADB and China, Wihtol said "ADB has been a partner of the Chinese government for more than 22 years. We greatly value this partnership. We appreciate the possibility to work closely with China's government on some very important areas."
"Increasingly we are focusing on areas like energy efficiency, clean energy and environment. You could almost say the tide is turning. ADB is now increasingly working with other countries' governments to share China's development experience," he added.
ADB projected China's economic growth rate at 8.2 percent for 2009 and 8.9 percent for 2010.
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