China's growing clout dominated the opening day Jan. 25 of the annual Davos forum, where political and business power-brokers fretted over the global economy and heard Germany's Angela Merkel plead for a freer hand. On the day China became the world's fourth biggest economy after reporting near double-digit growth last year, the World Economic Forum began its five-day networking bonanza with a stress on Asia's emerging markets.
Vice Premier Zeng Peiyan of China pledged to double per capita income by 2010, and he and other Chinese officials at Davos said their next five-year economic plan would put a greater emphasis on social progress and tackling rural poverty.
Business took center stage with the top-name executives here keen to exploit -- and tap into -- the pace of change, notably China and India. Banker Jakob Frenkel described it as a "fundamental change in the centre of gravity" for the world economy. At the same time, a straw poll of participants revealed acute concern about the environmental impact of China and India's growth.
Pointing to the increasingly competitive world market, Merkel argued for a loosening of the shackles hindering economic restructuring. "We must believe that our country can live better from its ideas," she said. "We have to make sure the political world intervenes at the right points and withdraws when it's appropriate."
Another key theme of the first day was concern over the U.S. economy and its excessive current account deficit. "This is the year to watch out carefully for the end of the great American spending binge," warned Stephen Roach, chief economist with Morgan Stanley. "What's occurring right now in markets and in policy circles is a dangerous degree of complacency. And out of complacency usually comes the surprise that ends up doing the most damage to markets and economies."
