As the world’s biggest trader and second largest economy, China has always been one determining factor in the global economic recovery, a senior economist with the United Nations said.
The world economy still faces the risk of a downturn, with fragile recovery among developed countries and a declining growth rate among emerging markets, said Liang Guoyong, an economic affairs officer at the investment and enterprise division of the United Nations Conference on Trade and Development.
In the short term, the threat of international financial risks in economic stability and growth looms large for emerging economies, as most of them have gone through a sluggish economic situation and financial turbulence over the years, Liang said.
“Against such recession, China can maintain a growth rate of 7 percent, or higher, becoming a strong impetus for economic recovery worldwide,” he said.
According to the economist, the sluggish global recovery has stemmed from the weak demand in developed economies, which have relied on quantitative easing, an unconventional monetary policy, to promote employment and growth, but have done little in terms of structural economic reform.
In addition, developed economies’ “beggar-thy-neighbor” monetary policies have further disrupted emerging markets. Under such circumstances, China’s decision to maintain the exchange rate stability of its currency, instead of pursuing competitive depreciation, is very crucial, Liang said.
He said China should launch new major reform and opening-up measures to re-boost market confidence. Progress in negotiations for the China-US and China-EU investment treaties, as well as the Regional Comprehensive Economic Partnership pact, will significantly improve China’s economic environment on bilateral and regional levels.