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China Daily Website

Countering concerns about China's economy

Updated: 2013-09-11 08:13
By Chen Xiangyang (China Daily)

Premier Li Keqiang will attend and deliver a speech at the opening ceremony of the World Economic Forum Annual Meeting of the New Champions 2013, also known as the Summer Davos Forum, on Sept 11 in Dalian in Northeast China. His speech will elaborate on China's development trends and ever-deepening reform and help boost the world's confidence in the Chinese economy. It will also show that China is taking a leading and responsible role in contributing to the healthy development of the global economy, which is facing new challenges.

The timing of this forum is of special significance, as emerging economies are mostly battling their own difficulties instead of powering the global economy, as the decline of developed countries has to some extent been curbed by their quantitative easing monetary policies, their seizing of the commanding heights of the new technological revolution and accelerated reform of their industrial structures, and strengthened multilateral cooperation, particularly the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership.

Due to the adverse effects caused by US Federal Reserve tapering off its quantitative easing, their hysteretic domestic economic reforms and single economic structures, emerging economies are facing challenges ranging from capital outflows, currency depreciation and financial market fluctuations to a significant slowdown in growth and looming inflation.

However, Premier Li will take the forum as an opportunity to show that despite the gloom-mongering of Western media about the prospects of emerging markets, especially China, and predictions of a shift in the global growth engines from emerging economies to developed economies, the outlook for China and other emerging economies is bright and they will resume their role as the drivers of global growth.

On the eve of the Summer Davos Forum, Li published an article entitled "China will stay the course on sustainable growth" in The Financial Times that roughly sketched out China's current economic situation in the course of its steady transformation and outlined the actions the government is taking to facilitate this transformation. Li made it clear that China can no longer afford to continue with its old economic model that relied on the high consumption of resources and high investment, and he emphasized that the government is taking a holistic approach to structural readjustment and further reform, while maintaining sustained and healthy growth.

Li emphasized that opening-up at a faster pace, delivering the dividends of reform by further streamlining government and delegating power to the market and society, expanding domestic demand, accelerating the process of urbanization and boosting the service sector will give impetus to development, and said the government has defined "upper and lower limits" for economic performance to avoid excessive fluctuations, prevent inflation and ensure jobs.

Meanwhile, the government will continue to support the Doha round of World Trade Organization talks, work toward the signing of bilateral free trade agreements, upgrade the China-ASEAN Free Trade Area, and explore new ways to open up China to the outside world, such as the recently announced establishment of a free trade zone in Shanghai. China will maintain a reasonable scale of investment, with priority given to energy conservation, environmental protection, railway projects in the central and western regions, and municipal facilities.

Of the people living in the countryside, more than 100 million are set to be absorbed into cities over the next decade or so, and continued urbanization offers huge potential for expanding long-term domestic demand. The government will further help release demand by improving public services and supporting small businesses.

As the world's second-largest economy, China's economic transition is in line with both its short-term and long-term interests, and will benefit both itself and the world as a whole.

Over the past five years since the outbreak of the international financial crisis, China has been the biggest contributor to world economic growth. According to the International Monetary Fund, if China's economy grows at a rate of 7.5 percent for the whole year, the contribution of China's economic growth to global economic growth will be 27.76 percent, this is in a sharp contrast to the US' 12.35 percent.

China's "forum diplomacy" and economic diplomacy have been gaining momentum recently. Li attended both the 10th China-ASEAN Expo and the China-ASEAN Business and Investment Summit; Vice-President Li Yuanchao attended the third China-Eurasia Economic Development and Cooperation Forum; while President Xi Jinping delivered a speech at the G20 summit in Russia. These show China's new leadership has confidence in engaging in economic exchanges and it is looking to take the initiative.

At the forum, Li is expected to look to the future. In the course of the profound and complex changes taking place in the global economic growth pattern, China should continue to coordinate both internal and external elements, timely accelerate reform and make efforts to lead the healthy development of the world economy.

The author is deputy director of World Politics Research Institute, affiliated to the China Institutes of Contemporary International Relations.

(China Daily 09/11/2013 page9)

 
 
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