James S. Turley, Chairman and Chief Executive Officer, Ernst & Young, USA; Co-Chair of the Governors Meeting for Professional Services 2009 talks to the participants at the session 'Global Industry Outlook 2' at the Annual Meeting 2009 of the World Economic Forum in Davos, Switzerland, January 30, 2009. [WEF]

The CEO of Ernst & Young thinks China's long-term economic prospects are strong and that the Asian giant will experience occasional roadblocks in the coming years but continue to be a world economic leader.

"There are going to be ups and downs. But by and large, China will stay as a leading economy in the world," James Turley, accounting firm Ernst & Young's global chairman and CEO, told Xinhua on the sidelines of the annual World Economic Forum.

One of the major topics of the Davos meeting, which was attended by some 2,500 business and government leaders, was the outlook for recovery of the world economy after its most serious crisis since the 1930s.

"When I think about the financial crisis the world has gone through, the recession we have gone through, and now the recovery we have been experiencing, I think about these in different boxes because there is not a smooth recovery across the world," Turley said.

"In China and India, and other really fast growing emerging markets, there's a pretty strong recovery. The recovery of the United States is weaker, but it is still recovering nicely. Europe is a lot more flat right now," he said.

Turley said that he was generally more optimistic about the economy in the longer term "because the fundamentals, especially in the emerging markets, are quite strong."

"We've seen a real shift of capital flow from west to east, from north to south, from traditionally developed markets to developing markets. That's going to continue," he said.

Turley noted that China is experiencing a transformation of its growth models, a change "from a more heavily exported economy to a both balanced domestic and exported economy."

"China is transforming itself, and in many ways, it is transforming the world," he said. "China will always be a strong exporter, but also having a strong domestic economy driven by growing middle market is going to be very important."

One of the first accounting firms to do business in China, Ernst & Young now serves a wide range of clients in the country, including some leading financial services, energy, technology and telecom companies.

"China has been the fastest growing member of our profession for many, many years. So it is very good for the company's presence in China," Turley said.

Given the bright growth outlook for China, Turley said, Ernst & Young will continue to invest in the country, and plans to dramatically increase its employees there. The company now has nearly 10,000 staff members in China.