Arirang: China’s Economic Transition
이희정   |  
|  2016.01.28 13:41
Turning to Arirang now, China's latest growth figures have prompted further concerns here in Korea over slowing global demand, especially because exports are the country's traditional growth engine. Hwang Ji-hye (황지혜) sat down with World Bank Vice President for East Asia and the Pacific Region to talk about the global conditions facing Korea.

After experiencing a rapid growth for more than a decade, now China is going through a painful slowdown recently. And this is coming from the government focusing more on domestic consumption over government investment. What's your take on the transition in China?

[INTERVIEW]
Axel Van Trotsenburg / World Bank E. Asia & Pacific Regional VP

"This has been a transition that we anticipated, we have expected it.

[CG IN]
‘Slowdown was expected; 6.9% growth in 2015 was substantive'

If you are growing 6.9 percent and even the bank is expecting in this year about 6.7, you are talking about substantial increase of an economy. Think of the 6.9, that is about 700 billion dollars so that is quite substantive.

[CG IN]
'Focus should be on sectors poised to lose, gain ground'

I think (what) we need to see in the transition phase (is), which sectors are going to be more challenged, which sectors are going to be growing, and what our advice has been, is to focus on that.

Exports to China account for a quarter of Korea's total exports. How would this transition affect Korea?

"First of all, indeed there is 25 percent, it's important.

[CG IN]
'Korea has been successful in penetrating other global markets'

Let's also add that Korea has been very successful to have 75 percent elsewhere, including for example ASEAN, Japan and the rest of the world.
I would argue that the 25 percent is also an opportunity.

[CG IN]
800m Chinese will enter middle class by 2030: World Bank

First, you have a very strong presence in the Chinese market. Secondly, the transformation means also that China will have a rapidly growing middle class.
So what the interesting transition is you will have some producers losing out, but there will be new demands in other goods.

[CG IN]
'Korea has shown capability to adjust to new trends'

Electronics is going to be very important. But also all the technologies that are able to adjust quickly to new market trends. You see that Korea has been successful over the last decade to adapt quickly to new trends. It's not about predicting which is the next successful product, an iPhone or whatever. But I think what will be important is, does an economy and do firms have the capability of adjusting."

[REPORTER]
Hwang Ji-hye

What do you see in the next five to ten years in terms of changes in the regional dynamics?

[Interview]
Axel Van Trotsenburg / World Bank E. Asia & Pacific Regional VP

"I think what is very important is that the center of the economic gravity is increasingly moving to East Asia.

[CG IN]
'Center of economic gravity will move to East Asia'

There are major powers in the region and Korea as also a very strong economic power could be actually very good as an integrator. Korea could also make major contributions given its own successful development trajectory.

[CG IN]
'Korea should be compared to other advanced economies'

The relevant comparator for Korea is not comparing your growth performance with other developing countries. It is with the more advanced countries.

And this year the aspirations are to be in the order of three percent. That would make Korea one of the fastest growing advanced economies in the world. And there, I think in relative terms, you have been doing well."

It's very interesting to hear that we are in the level of advanced economies, thank you so much for your time today.

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