How to improve the resilience of the global economy?

  The latest World Economic Outlook Report issued by the International Monetary Fund (IMF) believes that supply chain disruptions and repeated new crown pneumonia epidemics have caused the uncertainty of the recovery of the global economy to continue to increase. In October, the global economic growth rate this year is estimated to be about 5.9%, down 0.1% from the 6% predicted in April and July. The global economy will continue to recover, but the increase in global economic risks and challenges has become an obvious trend.
  The first conference of the Boao Forum for Asia Global Economic Development and Security Forum will be held in Changsha, Hunan from October 18th to 20th. With the theme of “Economic Security and Sustainable Development under Great Changes”, it will discuss how to deal with global economic risks and structural issues , To promote the recovery and sustainable development of the world economy.
  ”To improve the resilience of the global economy, the core is to promote the construction of an open world economic system, to create a community of interests, a community of responsibilities, and a community of destiny. In this case, it is possible to form a “cooperation not confrontation, win-win, not monopoly, but multilateralism.” Don’t be unilateral, let people from all countries share the fruits of economic globalization and world economic growth.” Zhang Yansheng, chief researcher of the China International Economic Exchange Center, said in an exclusive interview with a reporter from China Report.
The golden age of world economic growth is over

  The raging new crown pneumonia epidemic has brought about the greatest uncertainty facing the world economy since the global financial crisis, and it has brought huge impacts, challenges and risks to the society, economy and people’s livelihood. How will the world economy develop?
  Zhang Yansheng said that the recovery of the world economy this year and next is significantly better than expected. The IMF report data shows that the economic conditions of the world’s major economies are significantly better than predicted, and the recovery growth of the global economy and trade will continue until next year.
  ”But at the same time, there have also been differences in several aspects. The first is the differentiation of new crown vaccination rates, including the low coverage rate caused by values ​​and ideologies in the United States and European countries, and the economic capacity and vaccines of developing countries and emerging market countries. The low vaccination rate caused by imbalanced distribution directly affects economic recovery. The second is the differentiation of economic stimulus. The United States has continuously adopted super-large-scale fiscal stimulus policies, but emerging markets and developing countries do not have this ability. Stimulus led to inflation and had to raise domestic interest rates, which made the country’s economic recovery worse.” Zhang Yansheng told a reporter from China Report.
  ”The international environment is undergoing profound changes. The shrinking of globalization is the basic fact, the deceleration of global trade growth is the basic fact, and the reshaping of global industrial chains, supply chains, and value chains are the basic facts. From these three basic facts, I have drawn the basic facts. The judgment is that the golden age of world economic growth brought about by globalization is over.” Zhang Yansheng said.
  The biggest beneficiaries of opening up and globalization are emerging markets and developing countries. Whether it is globalized market-driven, open-driven, or innovation-driven, developing countries can benefit from it. “But now that developed countries engage in trade protectionism and de-globalization, the biggest victims are emerging markets and developing countries. This differentiation has both structural problems and periodic problems, and more importantly, it is now mixed with values ​​and consciousness. The form is politicized, making the situation severe and complicated.” Zhang Yansheng further explained.
Six “shifts” of the global economic and trade landscape

  Is international trade still the engine of world economic growth? Will the regionalization of international trade form a new pattern? How can China better deal with the world economic situation? Zhang Yansheng judged that there will gradually be new trends in which global demand shifts eastward, supply shifts eastward, innovation shifts eastward, services shift eastward, capital shifts eastward, and currency and financial cooperation shift eastward.
  ”In the’double cycle’ strategy, China will unleash its market potential as the world’s largest market, promote the expansion of domestic demand as a strategic base, expand the middle-income group, and use various strategies to make consumption become the’leader’ for driving modernization. At the same time, The domestic cycle will drive imports and foreign investment, and provide orders, demand and power to the world.” Zhang Yansheng told a reporter from China Report.
  China’s high-quality development will drive the transformation of East Asian production methods and production networks. “The construction of China’s modern production system and the application of technological innovation have driven East Asia and Southeast Asia not only to provide labor and factories, but also to provide technology and key parts production. This is the eastward shift of supply.” Zhang Yansheng said.
  At the same time, the eastward shift of innovation has also become a global trend. The “2021 Global Innovation Index Report” released by the World Intellectual Property Organization shows that the world’s innovation pattern is moving eastward. “Shenzhen-Hong Kong-Guangzhou technology cluster ranks second in the world, second only to Tokyo-Yokohama.”
  ”China’s service industry accounted for 78.5% of foreign investment in 2020, and accounted for nearly 80% of the country’s actual use of foreign capital in the first seven months of this year. When we talk about promoting high-quality economic development, a very important aspect is to use powerful industrial services and productive services to improve the quality and efficiency of the real economy.” Zhang Yansheng said that the world’s future development opportunities lie in East Asia, Southeast Asia, and the overall trade chain. The recovery of production chains, consumption chains, and supply chains will also attract capital to move eastward and currency and financial cooperation to move eastward.
Avoid falling into the “Samuelson Trap”

  In the face of differentiation and shift, how should the world collaborate, and how should China respond to challenges and look for opportunities?

The International Monetary Fund (IMF) said that since July, the risks and obstacles that are not conducive to the recovery of the global economy have become more obvious.

  ”In continuing to advance the process of full opening up and international cooperation, the core point is to avoid falling into the’Samuelson Trap’, that is, to avoid China’s technological progress, industrial progress, and trade progress from inevitably affecting major developments. The country’s core cheese and core interests will inevitably lead to conflicts and confrontations.” Zhang Yansheng told a reporter from China Report that this requires the construction of a higher-level complementary trade and industrial structure. Similarly, to build the Belt and Road with high quality, we must also explore a higher level of shared trade and industrial structure, and transform from a “winner takes all” to a “cooperative and shared” structure. This step is crucial to China’s development.
  ”For China, it is necessary to actively promote a new type of globalization, promote a new type of trade and investment, and promote a new type of industrial chain and supply chain cooperation. The way for China to move forward is to promote a higher level of opening up. Zhang Yansheng believes that it is mainly manifested in three aspects. One is to expand market opening, such as zero tariffs on 90% of goods trade after the RCEP transition period ends, which will promote the opening and development of emerging markets and developing countries; Institutional liberalization, such as the formal application to join the “Comprehensive and Progressive Trans-Pacific Partnership Agreement” (CPTPP), will accept higher standards of international economic and trade rules; the third is to promote innovation and openness, including the promotion of all-round technological innovation, business model innovation, etc. global cooperation.
  In addition, China has further eliminated non-tariff measures, promoted the level and efficiency of trade and investment liberalization and facilitation, and greatly reduced the trade costs of developing countries and emerging markets. “China is the largest trading partner of nearly 130 countries in the world. It promotes the open development of digital trade, service trade, green trade, and inclusive trade, carries out technological and digital empowerment, and develops high-end productive services and digital industrialization. To promote the high-quality development of trade and enhance the resilience of the supply chain industry chain is also to promote the resilience of sustainable trade development in emerging markets and developing countries.” Zhang Yansheng said.