China's Robust Growth Is Its Biggest Contribution to World

As both sides of the Atlantic Ocean are troubled by sagging economic growth and debt woes, China's robust economic growth will make significant contributions to the global economic recovery, said the World Bank's chief economist Justin Yifu Lin.

In a closely inter-connected world, growth of developing countries has served as the main engine of global economic recovery, Lin told Xinhua in a recent exclusive interview in Washington.

"Under the current global situation, if China can maintain its robust economic growth pace, it will be the biggest contribution China can make to the world economy," he said after a media background briefing on the Bank's flagship World Development Report 2012 released prior to its upcoming annual meetings.

China is attaining an ever increasing say on key global platforms including the G20 and other important global organizations, and is also winning credit for its role in tackling global economic challenges.

However, the renowned Chinese economist stressed that developed countries still account for about 60 percent of the combined global economic output, and their sub-par economic growth has started to affect financial markets, exports and economies of the developing countries this summer.

Policymakers in emerging economies including China should be alert to various external uncertainties, and keep a close eye on domestic inflationary pressure and asset bubbles.

China could maintain its strong economic growth and fast job creation pace, as the world's second largest economy has a high household saving rate and great potential for industrial upgrading, new infrastructure projects and rural areas' development.

He noted that a fresh flare-up of eurozone debt concerns and the credit downgrading of the United States have rattled the financial markets.

"Policymakers in developed countries should take global spillovers into consideration when adopting domestic policies," Lin cautioned.

Lin said that the U.S. dollar and euro are both international reserve currencies, and the United States and eurozone countries have resources to solve their challenges.

"What they lack now is not liquidity, but political consensus and resolution," he said.

He contended that advanced economies need to carefully walk the fine line between short-term fiscal stimulus to reduce unemployment and a long-term fiscal adjustment.

"One smart way is to channel short-term fiscal stimulus to projects that are conducive to eliminating long-term growth bottlenecks," noted the World Bank's senior vice president, adding that this can help create job opportunities now and improve productivity and increase revenues over the long run.

Commenting on market anxieties triggered by escalating eurozone debt problems and a string of weak economic reports in advanced economies, Lin said the possibility of a double-dip recession exists although the probability is low in the near future.

Lin also warned that "advanced economies might experience a Japanese-like lost decade", trapped in a prolonged period of sluggish growth and high unemployment.

The World Bank and its sister agency the International Monetary Fund (IMF) are scheduled to kick off their annual meetings late this month in Washington.