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World leaders eye booming economies of China, India

DAVOS, Switzerland -- China and India touted their booming economies to the world's business and political leaders yesterday, and German Chancellor Angela Merkel conceded that they posed tough competition as she strives to revive her country's sluggish economy.

Even though Germany was in on computer development from the start, it has failed to keep pace with the growth of the industry and must build its capacity, Merkel said in the keynote speech to the annual meeting of the World Economic Forum.

''China, India, and many other countries have this capability," she said. ''We have to face up to the competition."

Fifteen heads of state, top business leaders, and celebrities such as U2's singer Bono are attending the session to brainstorm on key issues facing the globe, including high oil prices, Iran's nuclear ambitions, new business models, and the shifting balance of power in Asia. In all, more than 2,340 participants from 89 countries are attending, including 735 who are either chairmen, chief executives, or chief financial officers of their companies, the highest figure of corporate leaders ever, Forum officials said.

Klaus Schwab, who started the World Economic Forum more than three decades ago, announced at the opening day of the annual meeting that the growing importance of China and the rest of Asia led to his decision to start a parallel session in China starting in the summer of 2007.

''China will be the home of many of the companies" that are expected to emerge on the global scene, Schwab told reporters. ''In some way we are creating a parallel World Economic Forum for the next generation of companies."

Zhu Min, executive assistant of the Bank of China, told the meeting, ''the Chinese will have another about 8.8 to 9.3 percent growth rates (in 2006) because the whole economy is pretty healthy and strong. Domestic consumption really picked up and domestic construction is very strong."

India had also come to Davos intent on underscoring that the South Asian giant had arrived on the world scene, said R. Seshasayee, vice president of the Confederation of Indian Industry and managing director of truck- and bus-maker Ashok Leyland Ltd.

''There is now a critical mass of interest in the world about India," Seshasayee said.

Stephen S. Roach, chief economist of financial services company Morgan Stanley, delivered a gloomy warning to the leaders about the global economy. He said markets and officials had developed ''a dangerous degree of complacency," assuming that an unbalanced world economy could continue without correction.

Asian central banks have helped to keep things going so far by supporting the US economy much longer than could be expected, Roach said.

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