China’s economy still ‘important engine, stabilising force’ amid global turmoil despite domestic challenges, says PBOC’s deputy governor
- Deputy central bank governor Xuan Changneng says China is expected to achieve its economic growth target of ‘around 5 per cent’ this year
- But central bank monetary policy committee member Liu Shijin warns there is still uncertainty over new methods to stabilise growth
As the world economy is undergoing a period of profound adjustment with slow and uneven growth, Chinese officials and government advisers warned against the spill over effects of external headwinds and urged structural reforms to unleash domestic potential.
“Currently, the world is facing many uncertainties and challenges,” said Xuan Changneng, a deputy governor at the People’s Bank of China (PBOC), at the annual conference of the Financial Street Forum in Beijing on Wednesday.
“Geographical conflicts are intensifying, trade protectionism is generally on the rise, and high inflation, high interest rates and high debt are prominent features.”
He said China’s economy is expected to achieve its economic growth target of “around 5 per cent” this year, which will top most major economies.
“[China] will continue to be an important economic engine and stabilising force to the world’s economy,” Xuan said.
Liu Shijin, a former vice-president and research fellow at the State Council’s Development Research Centre, told the forum in Beijing that even though growth of around 5 per cent this year seems a certainty, the average over 2022 and 2023 would still just be around 4 per cent.
The old methods are no longer working so well, but there is still uncertainty on new methods to stabilise growth
That would represent lower than the 5.1 per cent average over the first two years of the coronavirus pandemic in 2020 and 2021, as well as the 5 to 5.5 per cent growth potential agreed among academics.
But this year, all have lost momentum, said Liu, who is a member of PBOC’s monetary policy committee.
“So the challenge we are facing now is that the old methods are no longer working so well, but there is still uncertainty on new methods to stabilise growth,” he said.
Pent-up demand from lower-income groups and industrial upgrading, including the digital economy and green transformation, represent two new potentials for growth, according to Liu, but both require structural reforms.
“There is a saying that 500 million people in China do not have access to a flush toilet, and 1 billion people have never taken a plane. Can you let 300 million of these people use flush toilets and 500 million people get on planes? This is a huge demand that can be uncovered,” Liu said.
“The misalignment of China-US macro policy cycles is related to the policy orientation during the Covid-19 pandemic, and is more restricted by the different growth stages of the two countries. Against this background, the necessity of international macro-policy coordination is rising,” he said.
Facing the complex and severe international situation, we sincerely hope that all countries will strengthen dialogue and deepen cooperation
Xuan said the PBOC would continue to actively participate in international economic and financial governance, maintain and strengthen policy dialogue and coordination with other countries, especially major economies, and contribute to the openness of the world economy.
He added that the International Monetary Fund should continue to promote quota reforms and adjust quota proportions to better reflect the relative status of member countries in the global economy, and increase the voice and representation of emerging markets and developing countries.
“Facing the complex and severe international situation, we sincerely hope that all countries will strengthen dialogue and deepen cooperation,” he said.
