China's economic reforms win praise

Key global economic organisations say China's fundamentals remain positive in the long term

China's economic reforms have received a vote of confidence from heads of key international economic organisations such as the World Trade Organisation (WTO), International Monetary Fund (IMF) and World Bank, even as they voiced concerns over sluggish global growth.

In a joint statement with China, they said fundamentals of the Chinese economy remain positive in the long term, thanks to its efforts in developing new growth drivers.

The statement was issued yesterday after an unprecedented "roundtable" talk with Premier Li Keqiang in Beijing, ahead of the Group of 20 meeting of finance ministers and central bank chiefs in south-western Chengdu city this weekend.

The statement noted that China's economic structure has "improved" and that consumption and the services sector have become the major driving forces of the economy.

China can continue to contribute to global growth if it continues to deepen reforms and strengthen structural changes such as reducing overcapacity, cutting housing stock, deleveraging and reducing cost, said the statement.

COOPERATION BETTER

While there seems to be a trend of rejecting globalisation, the reality is that it will be hard for any country to develop well if it decides to remain in a silo.

RENMIN UNIVERSITY PROFESSOR ZHAO XIJUN

However, Mr Li, while recognising that China's contribution to the world's economy is significant - at around 30 per cent - and that the world's No. 2 economy serves as a stabilising factor, warned that it alone cannot make up for a global downturn as a result of Britain leaving the European Union.

"China is still a developing country - we cannot shoulder the heavy responsibilities of the world's economy," he said.

Praise for China came as the IMF raised its China growth forecast by 0.1 percentage point to 6.6 per cent on Tuesday, while downgrading its forecast for global growth for this year and next by the same quantum due to Britain's surprise vote last month to leave the EU.

IMF managing director Christine Lagarde said yesterday that the upward revision was because the IMF has witnessed the "determined and decisive implementation of reforms" in China. The support given to encourage growth was solid and steady, she added.

China's gross domestic product (GDP) numbers for the first half of this year showed signs that its slowdown has stabilised. The economy expanded 6.7 per cent in the second quarter, matching the pace of the first quarter.

The heads of the international economic organisations also expressed their concerns about the sustained slow-growth environment amid weak global demand.

Ms Lagarde said all policymakers should promptly implement effective monetary, fiscal and structural measures to boost growth.

World Bank President Kim Jim Yong, on the other hand, noted that there is a very loud rejection of globalisation and multilateralism in the western world.

But he believes that embracing multilateralism will help solve the world's problems.

Renmin University professor Zhao Xijun said this first meeting of the heads of international economic organisations with China signals the need for stronger and closer coordination and cooperation for the global economy to thrive.

"While there seems to be a trend of rejecting globalisation, the reality is that it will be hard for any country to develop well if it decides to remain in a silo," said Prof Zhao.

"Countries should pool their resources together to achieve synergy instead of going it alone."

A version of this article appeared in the print edition of The Straits Times on July 23, 2016, with the headline 'China's economic reforms win praise'. Print Edition | Subscribe