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.

The pace of economic change in China has been extremely rapid since the start of economic reforms just over 25 years ago. According to official statistics, economic growth has averaged 9.5% over the past two decades and seems likely to continue at that pace for some time. National income has been doubling every eight years. Such an increase in output represents one of the most sustained and rapid economic transformations seen in the world economy in the past 50 years.

World steel production has grown at just under 2% per year–more than twice the rate of growth for the OECD as a whole–from 1990 to 2003. Experience within the OECD has been mixed with falling production in several countries, especially the Czech Republic, Poland and the UK, and strong growth in Korea, Mexico and Turkey and, from a low base, in Austria and Finland.

Chinese-OECD relations have developed strongly ever since the OECD Council decided, in October 1995, to launch a programme of dialogue and co-operation with China.

How do you manage transport in a rapidly growing country of over 1 billion people? Developing the railways may be the simple answer. Increasing demands are being placed on China’s transport infrastructure, and the OECD’s Railway Reform in China suggests that the development of an efficient, innovative and market-oriented rail network would facilitate investment and modernisation, alleviate the growing income gap and spread the benefits of economic reform more widely.

China became the world’s largest recipient of foreign direct investment (FDI) for the first time in 2002. Yet while this is impressive for a country that began reaccepting foreign investment only recently, this jump is amid declining FDI inflows to other countries. In terms of FDI per capita, China still ranks relatively low, according to a forthcoming OECD report.

Putting together a water financing and management strategy requires looking at a range of questions. The most important one is, can we afford it? This is particularly tricky to answer realistically for large environmental projects that require heavy capital investments in public infrastructure and have a long lifespan. To keep to spending targets, decision-makers have to work out how much they have to spend on everything from buying capital and land to maintenance and operation expenditure. Their calculations have to be realistic and multi-annual.

The Chinese economy has come a long way in the past 25 years. Yet more needs to be done to ensure the continuation of rapid growth, including further measures to provide a suitable climate for foreign investment.

In an organisation as internationally minded as the OECD, I fail to understand the reasoning for the continued reference to Taiwan as “Chinese Taipei”. While I understand the term to be the outcome of an agreement between you and China, surely there is an inconsistency here. Especially since it split from China in 1949, Taiwan has evolved into a modern, vibrant democracy of the type you normally encourage.

In a recent review* of employment in China, the headline read “Take Our Workers, Please”. It aptly described efforts by Chinese officials to provide jobs for a hard-hit rural province. But the government is also using the global dotcom slowdown to draw back some of the 400,000 to 500,000 Chinese who studied, worked and stayed abroad in the last 25 years.

Two decades of agricultural reform have reduced poverty in rural China and incomes are still rising – last year, with an estimated upswing of 4.2%. But city dwellers are moving ahead much faster than their country cousins. In 1985, rural incomes were 54% of the level of their urban counterparts: today, they are less than one-third. The accession of China to the WTO and its integration into the global trading system will introduce further pressures on the farm market.

China’s business environment has become far more transparent since Deng Xiaoping began his programme of reforming and opening up the Chinese economy at the end of 1978, but the authorities’ way of dealing with private enterprises is still largely characterised by relationship-based rather than rule-based decision-making.

Much has been said and written in recent years about China’s economic potential, with some claims that it may one day rival the United States. China’s growth has certainly been impressive since the 1980s and even conservative projections point to a bright future. However, there may be a weakness: that growth has been very unevenly spread, with the bulk of the US$400 billion in new investment during 1983-2001 concentrated in the eastern and southern coastal belt. In fact, the eastern coastal region accounted for 88% of China’s total inflows of foreign direct investment (FDI) during this period, but the central region attracted just 9% and the western region little more than 3%.

China should grow less cereals and oilseeds and more vegetables as part of agricultural reform in the transition to a fully-fledged member of the global economy following its accession to the World Trade Organisation, a new OECD study suggests.

Since launching its policy of openness and reform some twenty years ago, China has demonstrated a special ability to develop its relations with the outside world, this being reflected in both the volume of visible trade and the amount of foreign capital inflows. As a result, since 1993 China has been the leading recipient of foreign direct investment (FDI) among developing countries.