China vital for global growth, expert says

With policies seen on the right track, 'robust recovery' of economy tipped

UNITED NATIONS — China can play a significant role in stimulating global growth this year, Hamid Rashid, a leading United Nations economist, said after the flagship report World Economic Situation and Prospects 2023 was published on Wednesday.

The past year was rough, but in 2023 China "can play a very important role in stimulating global growth", said Rashid, chief of the Global Economic Monitoring Branch, Economic Analysis and Policy Division, UN Department of Economic and Social Affairs.

"I think all the ingredients for recovery are there. We are very optimistic about the recovery in China."

Rashid, the report's lead author, expressed confidence that China's economy will experience a "robust recovery" this year as its policies are aligned correctly, meaning that fiscal policy and monetary policies are "in the right direction".

There has been no tightening of monetary policy (in China), which is quite reassuring because that would have probably suppressed economic growth, he said.

China's economy is well placed to grow because its inflation has been low, despite high inflation elsewhere, he said.

China still has "a very low inflation rate" compared with other countries, he said, which is an exceptional advantage.

The global financial crisis in 2008 transformed China into the engine of the global economy, Rashid said, and restoring the country's role as an engine is good news for many other developing countries.

Intersecting crises

World Economic Situation and Prospects 2023 paints a gloomy picture of the global economy and warns that multiple and intersecting crises are likely to exacerbate things, with growth set to slow from 3 percent last year to 1.9 percent this year.

Rashid emphasized the need to invest in productive capacity, promote human capital and combat climate change, adding that by making these investments, the world will "come out of this difficult time" as they will have "high multiplier effects", leading to higher growth and reducing inflation.

"China has done it very well over the years" because the government "can actually steer the recovery", he said.

Considering the importance of China's economy to the rest of the world, Rashid said the country consumes both commodities and tourism goods.

Citing tourism as an example, Rashid said it is a major source of revenue for many countries including Indonesia, Malaysia and Thailand.

"Europe now depends on Chinese tourism. And China plays a very important role in global tourism."

Growth in outbound tourism will benefit many countries that depend on the industry, he said.

China has very strong trade ties with other manufacturing economies in the region, including Japan and South Korea, he said, and those two countries, among others, benefit from China's recovery when it recovers well.

The Chinese economy will be on a trajectory of "not only recovery, but sustained recovery" if the pandemic can be controlled, Rashid said.

"We are facing difficult economic times where international cooperation can play a very important role in restoring global confidence."

                                                                                                       Xinhua