Opinion | China seeks stable, long-term growth over artificially boosting demand
Hu Shuli says others need to realise China's days of being the world's engine of growth are over as it turns its attention to structural reforms
China has adopted different policies from those in the past to address its current economic predicament. At last week's G20 leaders' summit, President Xi Jinping said the nation must advance structural reforms to solve the problems hindering long-term economic development, even though that might mean slower growth.
This shows that policymakers are determined to maintain stable growth while focusing on adjusting the structure of the economy. Beijing is not about to roll out another massive stimulus package and the rest of the world should not have unrealistic hopes that China will remain the locomotive of the global economy.
Recovery in the West has been slow amid economic uncertainties such as sovereign debt levels and unemployment rates. Since May, emerging economies have been plagued by problems from capital outflows, including sharp currency depreciation, rising inflation and lacklustre exports. Thoughts have turned to whether it is necessary to roll out a new round of stimulus measures to halt the slide.
Under such circumstances, the whole world has turned to China, the world's second-largest economy. It should be remembered that, following the collapse of Lehman Brothers in 2008, the State Council proposed a 4 trillion yuan (HK$4.5 trillion at the time) stimulus package on November 5 that year.
This was seen as a "big gift" for the G20 summit held just nine days later. Since then, the world has had high hopes for G20 gatherings. In the two subsequent years, the Chinese economy contributed more than 40 per cent to global economic growth. Resource-rich countries, such as Brazil, Australia and Indonesia, weathered the worst of the crisis by exporting goods to China. Consequently, some foreign political heavyweights have been unhappy of late because China has yet to launch a similar stimulus plan. Some foreign media have even criticised China for being selfish.
Resource-rich countries [like Brazil, Australia] survived by exporting goods to China
Xi's clarification at last week's G20 summit may have dashed some hopes, but it was a wise move. It shows the world that Chinese policymakers are rational and understand fully the structural causes of slowing growth, as well as the effects and limitations of policy tools.