Adding confidence and strength to the recovery of the world economy (authoritative forum) – domestic and foreign experts are optimistic about China’s economic development
Li Xuesong (Director, Institute of Quantitative and Technological Economics, Chinese Academy of Social Sciences)
Xiao Lisheng (Director of Global Macroeconomic Research Office, Institute of World Economics and Politics, Chinese Academy of Social Sciences)
Chen Yuyu (Professor, Department of Applied Economics, Guanghua School of Management, Peking University; Director, Institute of Economic Policy, Peking University)
Nalonsa Putapong Munchon (Chairman of Thai Chinese Chamber of Commerce)
Sebastian Perimoni (French Schiller Institute researcher, international issues expert)
Frederic Bardan (CEO of Belgian Sybase Central European Business Consulting)
People’s Daily China efficiently coordinated epidemic prevention and control and economic and social development, effectively responded to the impact of the epidemic, the Ukrainian crisis and other factors, overcame the downward pressure on the economy, and achieved stabilization and recovery relatively quickly. The Chinese economy has shown strong resilience and vitality, adding confidence and strength to the recovery of the world economy.
Since the beginning of this year, the international environment has become more complex and severe, and China‘s domestic epidemic has spread frequently, and the adverse impact has increased significantly. How to evaluate China‘s economic performance in the first half of this year?
Chen Yuyu: Economic growth in the first quarter of 2022 is more optimistic, reaching 4.8%. Since April, due to short-term negative shocks, major economic indicators have declined significantly, which lasted for nearly two months, until June finally stabilized and rebounded. Facing the extremely complex and difficult situation, the economy grew by 0.4% in the second quarter and 2.5% overall in the first half of the year. China‘s economy has withstood severe tests, especially in the second quarter to achieve positive growth, indicating that the economy’s inherent vitality and resilience are strong, and the fundamentals of China‘s long-term economic growth have not changed. In the medium and long term, we have reason to be confident in the Chinese economy.
Nalonsa Putapong Mongkun: In the first half of this year, China‘s overall economic development has been stable with some improvement. In the second quarter, under the impact of factors such as the rebound of the new crown pneumonia epidemic and the Ukraine crisis, China‘s economic operation experienced large fluctuations. With the efficient coordination of epidemic prevention and control and economic and social development in China, a series of economic measures have been introduced and implemented. Positive results have been achieved in the prevention and control of epidemics in key regions. The effect of a package of policies and measures to stabilize the economy has been gradually released, and economic growth rebounded significantly in June.
In the face of periodic and sudden unexpected shocks, China has coordinated epidemic prevention and control and economic and social development, safeguarded people’s lives and health, and strived to ensure the stability and safety of the supply chain and industrial chain. The economy has stabilized and rebounded in a relatively short period of time. It shows that the good situation of China‘s economic sustainable and healthy development has not changed. As the world‘s second largest economy, China has a solid material foundation accumulated over a long period of time and the advantage of a large market scale. In addition, it is constantly promoting the construction of a new development pattern, so it can withstand the downward pressure on the economy and continue to play a “stabilizer” role for the global economy.
Sebastian Perimoni: At present, due to factors such as the Ukraine crisis, the world economic recovery is under enormous pressure. In the future, some countries are at risk of falling into recession. The state of “high inflation” and “low growth” in some countries is not a problem for the world. The real economy, employment, consumption, etc. of various countries have a negative impact.
Against this background, China‘s economy grew by 2.5% in the first half of the year, and a number of data indicators show that China‘s economy has maintained a positive trend, showing strong resilience. In particular, it should be pointed out that from January to June this year, the added value of China‘s industries above designated size increased by 3.4% year-on-year, and the investment in infrastructure construction increased by 7.1% year-on-year, indicating that China‘s real economy has recovered steadily. In addition, in the first half of this year, the high-quality development of China‘s economy has steadily moved forward, and the high-tech manufacturing industry has maintained rapid development, which is impressive.
Park Shengzan: Since the beginning of this year, the international situation has been complicated and severe, and the world economic growth has slowed down significantly. China will promote economic and social development to recover as soon as possible. It is not easy for China‘s economy to achieve positive growth in the second quarter. After the severe situation from March to April, the economic recovery accelerated from May to June, which played a key role in driving economic growth in the second quarter. Good exports are a highlight of China‘s economy. In the first half of this year, the total value of China‘s import and export of goods trade was 19.8 trillion yuan, a year-on-year increase of 9.4%. The foreign trade import and export achieved steady growth and became an important driving force for economic development.
How to evaluate China‘s macroeconomic policies and their effects in response to the downward pressure on the economy?
Xiao Lisheng: Generally speaking, China‘s economy is still in transition. Although the economic growth rate of 2.5% in the first half of the year is lower than the normal level, there are still bright spots. The basic policy of stabilizing growth, adjusting structure and promoting reform has not changed. In the face of the severe international situation and the spread of the epidemic, China continues to adhere to industrial upgrading and structural transformation, adhere to the principle of “housing and not speculating”, and strive to stabilize growth, market players, and employment, and adjust the structure and promote reform in an orderly manner. carried out. For example, China‘s manufacturing investment in the first half of the year increased by 10.4% year-on-year. my country is promoting the transformation to high-end manufacturing industry, not taking the old path of resource-intensive development, stimulating the vitality of scientific and technological innovation, and injecting more momentum into economic development, which is one of the reasons for the continuous increase in the share of exports in the first half of the year.
Chen Yuyu: my country’s macroeconomic policies have demonstrated the ability to deal with huge economic fluctuations, with quick responses and strong efforts. The relevant departments found problems early and issued comprehensive policies. In late May 2022, the State Council launched the “Package of Policies and Measures for Solidly Stabilizing the Economy”. Thirty-three measures were proposed in six areas including policies. The package of policy measures to stabilize the economy has played a rapid role in more than two months. Although the economy grew by only 0.4% in the second quarter, it has already grown. The decline narrowed in May, and many indicators in June turned from negative to positive, and the overall economic situation stabilized and rebounded. The rapid effect of relevant policies is also inseparable from my country’s basic work in deleveraging, cleaning up shadow banking, focusing on solving hidden risks in key areas, and preventing systemic risks in the past few years before the epidemic.
In recent years, China‘s macroeconomic policy system has been continuously improved in the process of coping with risks and challenges. With the support of the government’s strong macro, monetary and fiscal policies, the market’s confidence in economic growth has been further enhanced. For example, the People’s Bank of China has handed over more than one trillion yuan of outstanding profits to the central government. This fund has greatly enhanced the central government’s ability to bail out this year and cope with the huge negative impact on the economy.
Sebastian Perimoni: China has effectively coordinated epidemic prevention and control and economic and social development. It has introduced comprehensive policies to stabilize economic growth, such as tax cuts and fee reductions, and increased infrastructure investment, which has stabilized the economic fundamentals. I have noticed that China‘s investment in scientific research has increased significantly. At present, the scale of the digital economy ranks second in the world. The added value of high-tech manufacturing in the first half of the year increased by 9.6% year-on-year. The progress in these fields of science and technology not only drives the development of related industries, but also helps to create employment and promote growth, which will effectively promote the high-quality development of China‘s economy.
At present, China‘s economy is stabilizing and improving, but the triple pressure of demand contraction, supply shock, and weakening expectations has not changed. Some unfavorable factors are still evolving, and many market players are still facing great difficulties. What difficulties will China‘s economic operation face in the second half of the year, and how should they be dealt with?
Li Xuesong: In the second half of the year, China‘s economy may also face the challenges of multiple risks: First, the repeated local epidemics will restrict economic operation; second, the contraction of foreign demand in developed countries will increase the downward pressure on my country’s exports; third, the supply and demand of real estate will continue to drag on domestic demand. increase. According to the requirements of the Party Central Committee that “the epidemic must be prevented, the economy must be stabilized, and development must be safe”, if these three types of risks can be effectively resolved, China‘s economy will most likely return to the normal growth range in the second half of the year. Policy responses can be strengthened from the following aspects.
Timely planning of reserve increment policies to provide assistance for economic recovery. In terms of fiscal policy, we will increase efforts to stabilize growth and ensure employment. In monetary policy, we will focus on coordinating and coordinating aggregate tools and structural tools to reduce financing costs for the real economy and maintain a reasonable growth in total credit. It is also necessary to increase support for regions and industries that have been greatly affected by the epidemic, as well as key areas such as technological innovation and green and low-carbon transformation.
Accelerate reforms to stabilize market expectations and expand domestic effective demand. Efforts should be made to stabilize the expectations of various market entities, and in particular, it is necessary to avoid downward convergence expectations of various market entities on future economic development.
Adhere to the principle of maintaining and stabilizing the chain and placing equal emphasis on epidemic prevention and control, promote the continuous smooth flow of the industrial chain and supply chain, and timely prevent the cost impact of the upstream on the mid-stream and downstream. Effectively play the role of the market mechanism, improve the ability to adjust the supply and demand of bulk commodities, increase the supply and price stabilization of important raw materials such as rare and precious metals, chemical products, chips, remove hidden barriers and unreasonable restrictions, and actively explore the gap between epidemic prevention and control and industrial development. dynamic balance path. Seize the opportunity period of digital and green development, strengthen technological innovation and improve the resilience of the industrial chain and supply chain.
Emphasizing the orientation of employment priority to fiscal and monetary policies, accelerating the release of effective demand, and boosting the labor market. Promote both supply and demand efforts, speed up the disposal and resolve risks of real estate enterprises, and take multiple measures to promote the stable and healthy development of the real estate market.
Frederic Baldan: Against the backdrop of the continued raging global epidemic and challenges and twists and turns in globalization, China has made full assessments and preparations. China‘s continued deepening of its opening to the outside world and the formal entry into force of the Regional Comprehensive Economic Partnership this year can help China hedge against some global supply chain tensions and other issues. China firmly promotes the construction of a new development pattern and makes full use of the vast domestic and international markets. China‘s economy has strong resilience, large room for manoeuvre and great growth potential. It can cope with short-term challenges similar to the epidemic and build strength for long-term development.
The long-term positive momentum of China‘s economy is more obvious. The quality of China‘s labor force is getting higher and higher, which has enhanced the international competitiveness of China‘s economy and is conducive to the stability and long-term development of China‘s economy.
At present, inflation in many countries in the world is high, the risk of stagflation is rising, the policies of major economies are tending to be tightened, and external instability and uncertainties have increased significantly. How to evaluate the overall situation of the current world economy? What impact will the situation have on the Chinese economy?
Li Xuesong: Since 2022, the global economic environment has become more complex, with more challenges and more uncertainties. Geopolitical conflicts have intensified, and some countries have high inflation and are facing the risk of stagflation. In the second half of 2022, some developed economies may slide from inflation to stagflation, emerging markets and developing economies will show regional differentiation, the world will raise interest rates, and monetary tightening may trigger economic recession and sovereign debt crises in some countries.
At present, the cycles of major global economies are not synchronized, and policy goals and directions differ greatly. Although the US economy is showing signs of downturn, it is still in a state of overheating, with strong aggregate demand, high inflation pressure and historically low unemployment. The economic cycle of the euro area lags behind that of the United States, and the recovery is not as stable as that of the United States. However, due to the Ukraine crisis, the gap between aggregate supply and aggregate demand has widened rapidly, and inflationary pressure has risen sharply. It is expected that in the second half of the year, with the tightening of monetary policies in the United States and Europe, and the gradual transition of the US economy into a downward cycle, the risk of shocks in the international financial market may further intensify.
The main goal of my country’s macro policy is to stabilize growth and ensure employment. Facing the tightening of external constraints, the independent implementation of macro policy requires stronger determination and superior skills. The spillover effects of external economic situation and policy changes on my country are more complex and changeable, and it is more difficult to coordinate international policies.
Park Seung-chan: The Ukrainian crisis and the U.S. economic downturn are prominent factors affecting global economic growth. Both Russia and Ukraine are important countries that affect energy and food prices. The Ukrainian crisis will lead to unstable supply and demand, and price increases will show a long-term trend, and the US economy may also be directly or indirectly affected. A downturn in the U.S. economy will lead to a drop in global stock prices, which in turn will lead to a decline in corporate value, investors will suffer losses, and anxiety about the future will continue to increase, leading to increased savings and lower consumption.
In the context of rising inflation in the United States and the ongoing crisis in Ukraine, many countries around the world are likely to face stagflation due to rising prices and interest rates, which will trigger a “domino effect” and the global economic situation may further deteriorate.
Under such circumstances, China needs to further drive economic growth through investment and consumption, and strive to strengthen its own economic resilience. In order to prevent consumption contraction in China, the government needs to provide policy support. The reason why China can better deal with inflation is that the price stabilization policy under the government’s control continues to play an effective role.
Frederick Baldan: Global economic growth still faces many challenges such as epidemics and geopolitical conflicts. The International Monetary Fund recently lowered its forecast for world economic growth in 2022 and 2023 to 3.2% and 2.9%, respectively, reflecting the recovery of the world economy. with growing pressure. The developed economies of Europe and the United States have high inflation and sluggish growth, some developing countries are facing unabated debt pressure, and the food crisis is imminent. All parties need to join hands to meet the challenges.
From a regional perspective, the Asia-Pacific region should give full play to its advantages in rapid development, maintain long-term stability and security in the Asia-Pacific region, and prevent the Cold War mentality from eroding the environment for economic growth in the Asia-Pacific region. As far as China is concerned, economic growth will still face the pressure of repeated epidemics for some time to come. How to gradually resume personnel exchanges in the context of the epidemic is also a major issue. From the perspective of enterprise and business cooperation, personnel exchanges are indispensable for business development and market expansion. Closer personnel exchanges can promote business cooperation, people-to-people and cultural exchanges between China and the outside world, and promote mutual understanding.
At present, the United States and some countries in Europe are facing the dilemma of high inflation. For the Chinese economy, is there a risk of imported inflation? How should you prepare?
Xiao Lisheng: At present, China‘s overall inflation is relatively stable, and the consumer price index (CPI) in the first half of the year remained at 1.7%. This aspect stems from the relatively weak overall demand in the Chinese economy in the first half of the year, and there was no significant price increase. On the other hand, the country has made arrangements in advance in the supply of commodities such as energy and food.
Due to the effective regulation of bulk commodities by the Chinese government, it has prevented the transmission of overseas risks, especially the rise in global energy and food prices. Under the circumstance of high inflation overseas, my country’s inflation has remained basically stable, which has reserved a large space for monetary policy, fiscal policy and future management policies of aggregate demand, which will help to promote the return of China‘s economy to a reasonable range.
Chen Yuyu: International inflation may last for a long time, because the loose monetary and fiscal policies of some economies have created strong aggregate demand.
In response to the impact of the epidemic on the economy, my country’s macro leverage ratio has risen only slightly, and it still has a large policy space. In terms of financial policy, my country has always adhered to a prudent monetary policy in recent years, and has not used monetary policy tools excessively because of short-term economic fluctuations.
Nalonsa Putapong Mongkun: China‘s economy is running steadily, prices are relatively stable, the macro policy environment is suitable, and there are basically no conditions for high inflation. China‘s economy has maintained a stable growth momentum for a long time, the employment situation is basically stable, foreign trade has grown rapidly, and high-quality development has achieved new results, and it has the ability to deal with economic risks.
With the improvement of the epidemic prevention and control situation and the emergence of policy effects, the advantages of China‘s large economy, wide market space, strong development resilience, abundant reform dividends, and strong governance capabilities will be further utilized, and China‘s economy is expected to maintain the momentum of recovery and development.
Recently, the International Monetary Fund, the World Economic Forum and other international organizations have warned that the global economy is facing the risk of recession, and the Chinese economy will still face many risks and challenges in the future. In the long run, what areas should China‘s economy make good moves to win the initiative?
Li Xuesong: We must prevent the spillover effects of external risks to my country and stabilize the confidence of the international community in China‘s economy. First, strengthen the determination to independently implement macro policies. According to the needs of the current economic cycle my country is in, we should place stable growth and employment protection at the top of the multiple goals of my country’s macro policies, and implement macro policies more actively and effectively. Given the current weak demand for credit in the private sector, more emphasis should be placed on the role of proactive fiscal policy. Second, enhance the flexibility of the two-way fluctuation of the RMB exchange rate, and give full play to the role of the exchange rate as a buffer against external risks. Periodic exchange rate depreciation at an appropriate level will help release risks and stabilize expectations. Third, we must stabilize the confidence of the international community in China‘s economy and capital market. Maintain a reasonable economic growth rate and guide the international community’s expectations for China‘s long-term economic growth and its increasing weight in the global landscape. While strengthening independent innovation, it is necessary to continue to deeply integrate into the global industrial chain and give full play to the attractiveness of my country’s super-large market advantages to foreign companies.
Park Shengzan: In the second half of the year, repeated epidemics, shrinking consumption, and rising prices of energy and food may become constraints to China‘s economic growth. China needs to formulate and implement a systematic and scientific epidemic response strategy, increase domestic demand, enhance the investment vitality of private enterprises, boost the confidence of foreign capital in the Chinese market, and continuously improve relevant systems to create a favorable investment environment for foreign companies.
Against the backdrop of repeated delays in the epidemic and weak global economic recovery, China‘s economy will continue to grow, and the quality of economic growth will be further improved. China not only pursues the speed of economic growth, but also pays more attention to improving quality and efficiency, and making innovation the driving force of economic growth will help optimize the economic structure and strengthen the long-term positive trend.
Sebastian Perimoni: The risk of inflation in the world economy will not subside in the second half of the year. The epidemic is still very likely to recur, and the impact has not been eliminated. Uncertainties arising from the Ukraine crisis remain, which will affect the continued recovery of the Chinese economy and the achievement of overall economic growth goals. As the world‘s second largest economy, China emphasizes the development concept of common development and common prosperity, upholds the concept of building a community with a shared future for mankind, and continuously implements the “Belt and Road” initiative. China‘s economic recovery has a positive impact on the global economy. China has also put forward a global development initiative, focusing on the fundamental issue of “development”, responding to the current expectations and needs of the world, especially developing countries, and has received extensive support and response. It is expected that relevant policies will continue to be implemented and contribute to the promotion of global common development and economic recovery.