China will show robust growth this year despite the economic recession in the United States and other parts of the world and its commodity imports will recover with an increase in domestic investment in the country. Dr. Martyn Davies, chief executive officer of Frontier Advisory, said at the Mining Indaba in Cape Town that growth in China was more dependent on investment in the country than consumer demand.
He said that even before the advent of the worldwide economic crisis, the country engineered the slowdown in its previously overheated economy itself by cutting down on infrastructure spend. However, China overshot its target of getting economic growth down from about 14% to 9% or 10% because it lost the US exports markets shortly after that.
He said the question was now whether China could turn on the taps for growth again. In order to achieve this end, the country needed a larger fiscal stimulus growth package than the existing one and other drivers of growth including a monetary stimulus.
Beijing or the Chinese government has pushed banks in the country to lend money again over the last three months and growth would pick up dramatically as a result.
Beijing is trying to increase finance in their own system as the government has unique control over its financial system. If the Chinese banks can heed this call, then decoupling - robust economic growth in China while the West goes through recession - may be possible in 2009.
Davies added that although economic growth of 13% or 14% in China was unlikely this year, the Chinese growth phenomenon was not over as 8% or 9% growth was still very achievable.
He elaborated that China and Africa's growth trajectories were intertwined and that they had common destinies. Chinese political sentiment to invest in Africa remained strong although events such as the political turmoil in Kenya last year has led to concern in Beijing over African political risk. Davies added that if one believed in the urban migration trend in China that would take place over the next 20-30 years then one should also be confident about Africa.
Africa was the only commodity-rich region open for business and served as a commercial learning ground for China.
There is a new coupling that says Chinese growth depends on Africa's ability to supply the country with commodities, he said.