WASHINGTON — Despite concerns about the slowdown of the world’s second-largest economy, China remains the single largest contributor to global economic growth, a US expert said on Aug 29.
If China’s economy grows at 6.7 percent in 2016, in line with the government’s official target, it would account for 1.2 percentage points of global GDP growth this year, said Stephen Roach, a senior fellow at Yale University and former chairman of Morgan Stanley Asia.
With the International Monetary Fund (IMF) currently expecting the world economy to expand at only 3.1 percent this year, China would contribute nearly 39 percent of the overall global growth, dwarfing the contribution of other major economies, Roach wrote in an analysis on news site Project Syndicate.
The US economy, the world’s largest economy, is expected to grow at 2.2 percent this year, contributing just 0.3 percentage points to overall global GDP growth, or only about one-fourth of the contribution made by China, according to the expert.
“China’s contribution to global growth is, in fact, 50 percent larger than the combined 0.8-percentage-point contribution likely to be made by all of the so-called advanced economies,” he said.
Moreover, no developing country comes close to China’s contribution to global growth, according to Roach. For example, India is expected to grow by 7.4 percent this year, but it would likely contribute just 0.6 percentage points to global growth as the country accounts for only 7.6 percent of world output.
“No matter how you slice it, China remains the world’s major growth engine,” Roach said, noting that global economic growth “remains heavily dependent” on China even if the economy is transitioning to what the Chinese leadership has dubbed the “new normal”.
Highlighting a “China-centric global growth dynamic,” Roach believed the global economy stands to benefit greatly from a successful rebalancing of China’s economy towards services and household consumption.
“A successful Chinese rebalancing scenario has the potential to jump-start global demand with a new and important source of aggregate demand — a powerful antidote to an otherwise sluggish world,” he said, noting that Chinese domestic demand has the potential to become an increasingly important source of export-led growth for China’s major trading partners.
“Despite all the focus on the United States, Europe, or Japan, China continues to hold the trump card in today’s weakened global economy,” Roach said. “The world needs a successful China more than ever.”