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In China, economic summit will focus on domestic growth

Scott Tong Dec 12, 2011

Jeremy Hobson: Well today China is holding what’s considered the country’s most important economic summit of the year. Leaders will be talking about the weak economy here in the U.S. as well as the debt crisis in Europe.

But as our former China correspondent Scott Tong tells us, the big focus will be on the domestic economy in China.

Scott Tong: For Beijing, priorities one, two, and three are growth, growth and growth. Not so long ago, China worried about overheating. But now things have slowed down — in part because of soft exports to a weak eurozone. So the government this week will turn to stimulus ideas. What’s on the menu? Perhaps pushing banks to lend more to businesses. Perhaps targeted government spending on low-income farmers.

Economic Albert Keidel at the Atlantic Council says the long view is to make Chinese companies and people wealthier, so they import more stuff from us.

Albert Keidel: The U.S. could continue to sell machinery and technology to them, which is what they really need to continue to grow. So if they are successful in enhancing growth in a lot of their sectors, it would help U.S. exports.

Right now the typical Chinese person makes $7500 dollars a year — not too high by global comparison. Of course, spending more money carries a risk of inflation. That’s long been a recipe for political instability in China. One year, meat prices rose, Chinese struggled to get by, and demonstrations spread.

That was 1989, the year of Tiananmen Square.

In Washington, I’m Scott Tong for Marketplace.

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