Aerial photo taken on Sept 17, 2020 shows the Houhai area in Nanshan district of Shenzhen, Guangdong province. (CHEN YEHUA/XINHUA)
BANGKOK – China's economic growth and stability have become public goods for the East Asia and Pacific region, providing stability and support to the region, a World Bank economist said.
"China has become more and more important for this region," and what happens in China matters for the whole region, World Bank East Asia and Pacific Chief Economist Aaditya Mattoo said in a recent interview with Xinhua.
The World Bank has seen three new growth opportunities for the East Asia and Pacific region, namely trade, digital technologies and green production
China remains a major contributor to global growth and also a significant source of final demand for countries in the region, with about one-tenth of total value added produced in Laos, Malaysia, Myanmar, Thailand and Vietnam being ultimately absorbed in China, according to the World Bank's recent East Asia and Pacific Economic Update.
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Despite downside risks, including the Russia-Ukraine conflict, which could lead to even higher commodity prices, shrinking export demand and volatile financial market, COVID-19 resurgence and tightening global financial conditions, Mattoo said China has the policy space and capacity to respond to the shocks.
No country will find it easy to deal with the triple shocks, he said, adding "fortunately, China behaves wisely and has the potential to behave wisely."
He said China exercised fiscal and monetary policy restraints in the early phase of the pandemic, leaving the country with the room for policy maneuvering.
If China provides fiscal stimulus, it will benefit not only the Chinese economy, but also the regional economy, he said.
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The World Bank has seen three new growth opportunities for the region, namely trade, digital technologies and green production.
Mattoo advised policy makers to keep trade open. "Export restrictions are an example of prisoners' dilemma, where you take action which seems to be in your own interest, but makes everyone including yourself worse," he said.
Mattoo said countries should also create the infrastructure to take advantage of the faster diffusion of technologies, which he said China is doing more successfully and is trying to develop a regulatory approach to harness the benefits while addressing the problems such as monopoly and digital privacy.
The World Bank lowered its forecast for the overall economic growth in developing East Asia and Pacific region to 5 percent in 2022, 0.4 percentage point less than its previous projection in October.