'India growth likely to exceed China's'

Indian economy is expected to grow at a faster rate than neighbouring China in the near future, a top Chinese official said today.

The Chairman of China's National Council for Social Security Fund, Dai Xianglong, has also called for gradual internationalisation of Chinese and Indian currencies that would help in safeguarding financial stability in Asia.

"India attaches more importance to knowledge and technology innovation in the development of the new-and-high tech industries. We believe that India may achieve better development in the next few years. In future, the economic growth rate of India is likely to exceed China's," he said.

He was speaking at the annual DSP Merrill Lynch India Investor Conference here.

India and China are the world's two fastest growing economies, coming out of the global financial crisis relatively unscathed.

Impacted by the meltdown, the world economy shrank in 2009 whereas the two Asian giants saw their economies growing at impressive rates.

India recorded 6.5 per cent growth, while China's GDP expanded by 8.7 per cent in 2009, according to the International Monetary Fund.

Xianglong noted that both nations "should strengthen financial exchanges and cooperation and work together to promote the reform of the international financial system and safeguard the financial stability of Asia".

"During this process, the gradual internationalisation of Renminbi and Rupee is of special significance."

China's pension fund National Council for Social Security Fund is among the world's largest of its kind in terms of assets.

Making a strong pitch for internationalisation of Renminbi, Xianglong said that it would also assume all functions as an international reserve currency and account for sufficient proportion in the global reserve currency.

"The internationalisation of Renminbi is a long process that may take about 20 years to complete.

"...China and India are two large economies in Asia and good neighbours. It is advisable for both countries to study the possibility of currency swap between China and India," he added.

According to him, the international community should urge the US to maintain the fiscal and trade deficits at a reasonable level and also and ensure that overseas investors would not suffer losses.

"...It is necessary to promote diversification of the international currencies to form an international monetary system made up mainly of the US dollar, euro and a certain Asian currency," he pointed out.

Noting that India and China account for over one-third of global population, Xianglong emphasised that if the two countries can work together for development, then it would also be "beneficial for the world".