The Economic Summit of the China Development Forum 2018 started on March 24. In the first plenary session on the morning of the first day, themed “A New Agenda for the World Economy,” experts discussed challenges, such as growing trade tensions, facing the global economy. The also talked about China’s policies to improve the quality of its economic expansion, reduce debt and control financial risks.

This session was hosted by Yu Bin, Director-General of the General Office of the Development Research Center of the State Council. The speakers are: Wang Yiming, Vice President (Vice Minister) of the Development Research Center of the State Council; Pascal Lamy, former Director-General of the World Trade Organization; Zhu Guangyao, Vice Minister of Finance; and Li Yang, President of the National Institution for Finance & Development and Former Vice President of the Chinese Academy of Social Sciences.

Wang said the high-quality growth China is pursuing will see the country shift its focus from expansion in size to structural upgrading, and from factor-driven to innovation-driven expansion. Such a transformation means the economy needs to provide new products and services to meet higher consumer demand, improve the added-value that products provide, and move upward on the industrial value chain by promoting science and technology innovation and increasing human capital.

Lamy voiced concerns over “a dangerous disconnect” between economics and politics today, with the world economy performing well even as international political tensions are high, which has been underscored by the Brexit and the election of “a nationalist president” in the U.S. He said history has proven that trade wars are a “negative-sum game.” Improvements to the existing multilateral trading system are necessary, including further market opening and better discipline on subsidies, investment and public procurement. But changes “have to be negotiated, not imposed,” he said. He also called oncountries to “consolidate a rules-based trading system.”

Zhu briefed the audience on discussions conducted at the Meeting of Finance and Central Bank Deputies in Buenos Aires, Argentina. He said the consensus is that the global economy will have stable growth this year. All major economies are likely to post positive expansion, differing from the past decade when some countries had solid growth while others struggled with crises. All countries agree that pushing forward structural reform after ensuring growth is important for the world economy, and that sustainable growth can be achieved through infrastructure investment, he said.

The meeting also discussed the digital economy and reminded governments to pay attention to regulations on taxation and anti-money laundering while promoting the development of innovation. Delegates also vowed to jointly defend free trade and the rules-based multilateral international trading system, to keep a close eye on the impact of developed economies’ monetary tightening on the global market, step up regulation of the digital economy, and ensure debt sustainability.

Li said that China’s debt problem is under control and its overall leverage ratio is not overly high, given that the Chinese government has long been making hefty investments and amassed tremendous assets. He added the country still has a very high savings rate and has kept a positive international investment position. China’s sovereign assets totaled 241.4 trillion yuan ($35.8 trillion) at the end of 2016 while its sovereign liabilities amounted to 139.6 trillion yuan, leaving its net assets at 101.8 trillion yuan, according to figures from the National Institution for Finance and Development. Even if non-liquid assets such as land and buildings are excluded, the country’s net sovereign assets are still high at 20.7 trillion yuan.

The government will focus on reducing debt taken on by state-owned enterprises, particularly in the process of closing down so-called zombie companies, Li said. It will strictly control local government financing, improve the risk management framework and deal with non-performing assets, he added. It will strengthen supervision on the asset management industry, and keep monetary policy neutral with a tightening bias in the campaign to deleverage the economy.

Li also warned that huge government deficit and debt are the biggest challenges facing the U.S. economy.

(By Caixin reporter Fran Wang)

--About CDF--

China Development Forum (CDF) is the first annual high-level international conference held in China right after the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) each year. Under the mandate, "Engaging with the world for the common prosperity”, it serves as an important platform for Chinese government to carry out candid exchanges and discussions with leaders of global businesses and international organizations as well as foreign and Chinese scholars. Initiated in 2000, CDF has made remarkable contributions for the policy exchange and international collaborations between China and the world.

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China Development Research Foundation (CDRF)

DU Jing：

64255855-8054 dujing@cdrf.org.cn
LIU Yang：

64255855-8031 liuyang@cdrf.org.cn
XIA Tian：

64255855-8086 xiatian@cdrf.org.cn
ZHU Meili：

64255855-8204 zhuml@cdrf.org.cn

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