Vigorous growth has resumed in China, thanks to a very large monetary and fiscal stimulus. Momentum picked up in the second quarter and annual GDP growth is projected to exceed 8% in 2009 and 10% in 2010, before easing slightly in 2011 as the impact of the fiscal stimulus ends. The strong increase in domestic demand stemming from the stimulus has drawn in imports, while exports have been weak and may not recover to pre-crisis rates. As a result, the current account surplus is set to fall sharply to 5.5% of GDP by 2010 before rising somewhat in 2011, as domestic demand growth eases. Inflationary pressures are likely to remain subdued.

The Chinese economy is now rebounding strongly from the slowdown in the autumn of 2008, thanks to sizeable monetary and fiscal stimuli. Real GDP growth is projected at 7.7% this year and 9.3% in 2010, with some rebalancing towards domestic demand.

GDP growth has fallen, from a peak of nearly 12% to a pace in the high single digits. Export growth is weakening and, with slower capital formation, domestic demand is also projected to ease in 2009, before recovering in 2010. Disinflation is on course to continue, in part due to moderating commodity prices but also reflecting slower output growth.

Promoting effective competition in developing countries means getting tougher on cartels in the OECD area, and compensating customers internationally. Through a new competition fund, the OECD could play a lead role in making sure poorer countries get a fairer deal.

The world economy faces challenges from the new powerhouses of China and India (see Nos 263 and 264/265, 2007). In order to compete, there is a case for closer co-operation between developed countries and, in particular, tighter integration in Europe.

The great 20th century sinologist, Joseph Needham, once drew up a list of 24 technical innovations brought from China to the West. They ranged from gunpowder and the wheelbarrow to printing, cast iron, the magnetic compass and the chain suspension bridge. By 1600 the torch of innovation had passed to the West.

Well done on a clever choice of photo for “Africa: An emerging markets frontier” (No 263, October 2007). Africa is certainly in a better state than it was and, as you point out, all that new investment coming from around the globe is encouraging. The test is how long it will all last.

The emergence of China and India on the world economy still unfolds. Lifestyles are evolving fast, and that means more demand, more energy consumption and more greenhouse gas emissions. But what of the impact on climate change?

Innovation has played a modest role in explaining growth in both China and India in recent years, but both countries have work to do to sustain their promising growth paths. Moreover, there are important differences between the respective challenges that each country faces.

After moderating in the second half of 2006, economic growth has accelerated again and is expected to reach almost 11.5% in 2007, leading to a widening of the output gap. The inflation rate is projected to increase to around 4.5% in 2007 and stabilise thereafter as weaker food prices are estimated to offset accelerating non-agricultural prices. Despite continued strong export growth, output is likely to slow in 2008 and 2009 as imports accelerate. Nonetheless, the current account surplus is projected to rise from around $350 billion in 2007 to over $500 billion in 2009, passing from 11.25 to 11.75% of GDP.

Latin America is looking towards China and Asia–and China and Asia are looking right back. This is a major shift. For the first time in its history, Latin America can benefit from not one but three major engines of world growth.

When a blackout hit part of New York recently, some people blamed the air conditioning, as demand soared during a heat wave. Air conditioning has caught on around the world, which means year-round demand for energy beyond cold winters, and so bigger bills and environmental costs.

A new global courtship is blossoming, and it is bringing China and Latin America closer together. Whether it ends in happiness or in tears depends mostly on Latin America.

On 22 March, World Water Day 2007, 21 Chinese environmental NGOs came together to launch a new “Green Choice Initiative”. Aimed at China’s vast consumer population, the hope is to encourage all individuals to consider a company’s environmental performance in guiding their daily purchasing decisions.

Is China becoming more restrictive towards foreign investment? New rules on foreign mergers and acquisitions issued in 2006 suggest that it might be, even if those rules also include significant improvements.

Although natural phenomena such as volcanic eruptions or warm ocean currents, or even the earth’s tilt, might all contribute to global warming, carbon dioxide (CO2) generated by human activity–from running homes and factories to flying planes and mowing lawns–is accepted as a major culprit.

Almost every household in China has a mobile phone. In fact, China is now the world’s largest mobile phone market, both in demand and supply: 303 million mobile phones were produced in China in 2005, exceeding production levels in most OECD countries. However, as this year’s OECD Information Technology Outlook points out, mobile phones are not the only sector of information and communication technology (IT, also known as ICT) where China is making inroads.

The report entitled Challenges for China’s Public Spending: Toward Greater Effectiveness and Equity, published earlier this year, identified education and healthcare as priority areas for public spending. Why does China need to spend more on education and health?

China has dominated policy and business thinking since the start of the century. Much has been written about its economic transformation and governance, about its huge business potential, and more recently about its influence as a major player in the wider world economy. But what is it actually like to do business there? Joerg Wuttke is vice-president of the European Chamber of Commerce in China and has been doing business there for 16 years, formerly with ABB China and now with BASF China. We asked Mr Wuttke for some personal insights.

“The hills are high and the emperor is far away” is an old Chinese dictum that rapid growth is now putting to a severe test. Some consequences of rapid expansion, such as spending imbalances and regional lags, are probably inevitable in a country as large and varied as China, with its 1.3 billion people, multiple spoken languages and dialects, a score of provinces and five autonomous regions. But if they are not addressed, these problems could worsen, to the detriment of the economy.