China, US can drive global growth despite policy differences, deputy finance minister says
Clarity of thought means nations are in a win-win situation that can benefit the world as a whole, Zhu Guangyao says
Despite their different trajectories, the clarity of China’s and the United States’ economic policies can help to drive global growth, a senior Chinese official said on Friday.
The world’s two largest economies can “learn from each other” and make renewed contributions to global expansion, Zhu Guangyao, vice-minister of finance, and Chinese President Xi Jinping’s representative at international financial and economic talks, said in Beijing.
Xi’s clear ambitions for China’s economy and Trump’s “America first” policy can result in a “win-win” situation, he said.
“In the process of [pursuing their own policies], China and the US can … make a contribution to the global economy.”
China’s leadership this week concluded a three-day closed-door work conference that enshrined “Xi Jinping Economic Thought”, and established managing risk in the financial sector and improving the environment as national priorities.
On the other side of the Pacific, Trump secured a major victory for his economic policy when the US Congress gave final approval for a sweeping tax cut plan, which the president hopes will boost domestic growth.
Such clarity on policy can only be good for the world economy, Zhu said, as China and the US combined account for about 45 per cent of global GDP.
“Both China and the US have very clear policy goals,” he said. “China needs to achieve its ‘centenary goals’ and Trump wants to make America great again.”
Beijing’s “centenary goals” are to make China a moderately prosperous society by 2021 – the 100th anniversary of the founding of the Chinese Communist Party – and a prosperous and advanced economy by the time the People’s Republic turns 100 in 2049.
Zhu highlighted three main differences in the approaches adopted by China and the US.
First, after decades of breakneck expansion, Beijing was now focusing on “high quality” growth, while the US was seeking to boost its annual growth rate to 3 per cent, he said.
Second, China was tightening regulatory controls on the financial sector while the US was trying to deregulate; and third, China was tackling air pollution by cutting emissions while the US was relaxing its environmental standards.
Although Zhu did not speak directly about Trump’s tax cut plan, it is likely – when packaged with Washington’s tougher stance on trade and a hawkish Federal Reserve – to create headwinds for China’s growth as it could lure long-term investments away from the country.
Despite that possibility, Beijing appears unfazed by Trump’s plans. The statement released at the end of the economic work conference, at which the country’s top leadership set the policy direction for 2018, made no mention of either the US or its president. It did, however, say that China has become the “major engine and stabiliser” of the global economy.
Xi’s new focus on quality, instead of speed, with regards to China’s economic growth was “important for the world,” Zhu said.
According to the forecasts released by the International Monetary Fund in October, the global economy will grow by 3.7 per cent next year, from an estimated 3.6 per cent in 2017.
This year’s expansion was better than expected thanks to improvements in the euro zone, Japan, China, emerging Europe and Russia, which offset the downward revisions for growth in the US and the United Kingdom, the IMF said.