China’s economy faces strong external headwinds, even though its contribution to world’s growth this year is likely to exceed that of the United States, the country’s vice-finance minister said.
Vice-Minister Zhu Guangyao made the remarks on Saturday at a symposium presented by Tsinghua University. He cited the latest International Monetary Fund assessment of the world economy to illustrate China’s bleak external prospects.
The IMF report, released ahead of its annual convention in Lima, Peru, in early October,documented the worst global growth since 2009, in the immediate aftermath of the globalfinancial crisis. For the fourth time in a single year, the IMF lowered its outlook on world growth — from 3.8 percent to 3.1 percent. Emerging economies would see an aggregate decline, the report said, though the developed world is expected to post its best performance since 2010.
“IMF gauged the economic growth in Purchasing Power Parity terms, in which developing countries account for more than half of the output. In this circumstance the world still seesonly 3.1 percent growth, which indeed is troubling,” Zhu said. “It should alert us.”
Describing the external environment as “the most complicated” since 2009, Zhu cited IMF’sprojection that Brazil will see its growth shrink 3 percent, while the Russian economy isexpected to contract 3.8 percent.
Earlier, the IMF deeply cut the Eurozone’s outlook to 1.5 percent from 2.5 percent, while adjusting the US outlook from 3.1 to 2.6 percent. The two are China’s largest trading partners.China’s exports in the first three quarters slumped 1.9 percent, making it impossible toachieve this year’s 6 percent increase target.
Although the Chinese economy’s realignment toward consumption and service compoundedpains for developing countries that rely on exports of oil, ore and metals, the IMF held itsforecast for China’s growth this year unchanged at 6.8 percent.
Zhu said global output — in US dollar terms — will contract this year given the strengthening dollar. But China’s own calculation showed the country’s contribution to world growth this year will be near $1 trillion, exceeding the $800 billion forecast for the US.
“In such a scenario, China would do its best for the world as long as it keeps its own house inorder,” he said, adding that the most critical factor in maintaining the current pace is pushingthrough the reforms designed in China’s 2013 blueprint.
Tsinghua University’s Center for China in the World Economy said in a Saturday report that entrenched lethargy among local officials needed to be addressed.
Incentive, the center suggested, should be designed at the top to give officials reason to initiate reform and bolster investment. The center also called for State-owned enterprises toundertake reforms. Some high-profile SOE reforms should be carried forward as a showcase to encourage more from others, it said.