China’s economy faces strong external headwinds, even though its contribution to world growth this year is likely to exceed that of the United States, the country’s vice-finance minister said.
Vice-Minister Zhu Guangyao made the remarks on Oct 17 at a symposium presented by Tsinghua University. He cited the latest International Monetary Fund assessment of the world economy to illustrate China’s bleak external prospects.
The IMF report, released in early October, documented the worst global growth since 2009. For the fourth time in a single year, the IMF lowered its outlook on world growth－from 3.8 percent to 3.1 percent. Emerging economies would see an aggregate decline, the report said, though the developed world is expected to post its best performance since 2010.
“IMF gauged the economic growth in Purchasing Power Parity terms, in which developing countries account for more than half of the output. In this circumstance the world still sees only 3.1 percent growth, which indeed is troubling,” Zhu said. “It should alert us.”
Describing the external environment as “the most complicated” since 2009, Zhu cited the IMF’s projection that Brazil will see its growth shrink 3 percent, while the Russian economy is expected to contract 3.8 percent.
Earlier, the IMF cut the Eurozone’s outlook to 1.5 percent from 2.5 percent, while adjusting the US outlook from 3.1 to 2.6 percent. The two are China’s largest trading partners. China’s exports in the first three quarters slumped 1.9 percent.
Although the Chinese economy’s realignment toward consumption and service compounded pains for developing countries that rely on exports of oil, ore and metals, the IMF held its forecast for China’s growth this year unchanged at 6.8 percent.
Zhu said global output－in US dollar terms－will contract this year given the strengthening dollar. But China’s own calculation showed the country’s contribution to world growth this year will be near $1 trillion, exceeding the $800 billion forecast for the US.
“In such a scenario, China would do its best for the world as long as it keeps its own house in order,” he said, adding that the most critical factor in maintaining the current pace is pushing through the reforms designed in China’s 2013 blueprint.