Dignitaries, delegates and entrepreneurs lambasted decoupling attempts at the 14th Annual Meeting of the New Champions (AMNC), also known as the Summer Davos Forum, in North China’s Tianjin Municipality on Tuesday, at a critical time against the backdrop of haunting recession risks, and when the global economic recovery and growth need dialogue and cooperation more than ever.
The strong growth of the Chinese economy will continue to provide impetus to global economic recovery with growth for the second quarter expected to register faster growth rate than in the January-March quarter, according to Chinese Premier Li Qiang, who delivered a keynote speech at the opening ceremony at the forum.
De-risking and reducing interdependence is a false proposition as the global economy has already become intertwined. The so-called risk should not be the judgment of a government or an organization, but concerned companies and participants of production, Premier Li said, calling on the international community to firmly oppose the politicization of economic and trade issues and jointly maintain the stability and unimpeded flow of global industrial and supply chains.
The Premier made an analogy with the recent Dragon Boat festival in China, reiterating that now it is the time for the world to pull together and row the boat.
‘Decoupling’ lambasted
Highlighting the AMNC on Tuesday is a session titled “Braving the Headwinds: Rewiring Growth Amid Fragility,” attended by Barbados’ Prime Minister Mia Amor Mottley, Vietnamese Prime Minister Pham Minh Chinh, New Zealand Prime Minister Chris Hipkins and Director General of the WTO Ngozi Okonjo-Iweala, during which the notion of decoupling was lambasted.
Okonjo-Iweala told the panel that if two trading blocks were decoupled, it will cause the global GDP to shrink by 5 percent in the longer term, with developing countries being the biggest victims with double-digit loss. “So decoupling or fragmentation is something that the world simply cannot afford to have,” Okonjo-Iweala noted.
“We are seeing decoupling issues and this is not going to address global challenges,” Vietnamese Prime Minister Pham Minh Chinh said. No one country can solve these issues alone, he said
The strong rejection of decoupling has raised resonance among the 1,500 elites from business, government, civil society, international organizations and academia attending the event.
“Premier Li Qiang’s remarks were inspiring. I very much appreciate it as final kind of remarks on battling together. This is in essence what we should all be doing, just get in the same boat and get to work,” Meirav Oren, the CEO and Co-Founder at Versatile of US, told the Global Times on Tuesday on the sidelines of the forum.
Oren noted that nourishing innovation and making sure that people understand each other and creating the bridges to fix fragmentation are what the world need today.
Chinese observers following the Davos forum said it is high time for China to warn the world about the danger of “de-risking” rhetoric as it is both deceptive and essentially government intervention to market forces.
Li Yong, a senior research fellow at the China Association of International Trade, told the Global Times on Tuesday that by borrowing this corporate term,some Western politicians are trying to realize the effect of decoupling under the disguise of de-risking.
The risks talked by politicians and the risks talked by the business community are entirely different things, Li said, adding that companies know how to control business risks and does not need government’s hand in it.
China driving global growth
At the forum, attention was also paid to the driving role of the Chinese economy, with role of the world’s second largest economy and its potential positive spillover effect highlighted as the world is grappling with tremendous challenges, including the global health crisis, inflation and economic recession, “decoupling” attempts by some countries and food and energy crises each taking its tolls on global growth.
Global trade growth has slowed down to 1.7 to 2 percent in recent years, from around 6 percent before the pandemic, while the IMF warned a decoupling will slash global economic growth by as much as 7 percent, plunging the world into recession.
Founder and Executive Chairman of the World Economic Forum Klaus Schwab said amid the challenges, China’s above 5 percent growth target for 2023 is both “ambitious and encouraging.”
During the past three years, China maintained an average annual growth of 4.5 percent, 2.5 percentage points higher than the global average, ranking leading position among major world economies, Premier Li said.
China will continue to provide strong dynamism to the world’s economic recovery and growth, the premier said.
China is expected to achieve this year’s economic growth target of around 5 percent, with the growth in the second quarter to surpass that of the first quarter, Premier Li said. China logged 4.5 percent growth in the first quarter.
The spillover effect of China’s economic growth will be a substantial drive for the limping global economy, delegates and experts said.
China will contribute 34.9 percent of the global growth in 2023, per International Monetary Fund prediction in May. The Asia-Pacific region as a whole is projected to drive about 70 percent of global international economic growth, increasing its presence as Western growth slows.
Craig Polkinghorne, a senior banker at the South Africa-based Standard Bank, told the Global Times on Tuesday on the sideline of the forum that China is a very important trading partner for almost all African countries, and if China’s growth changes, it will have a big impact on Africa, so “we would welcome Chinese growth to be as high as possible.”
“We would also look to see where the current trade can be augmented, as I believe finding ways to increase trade is more important than the focus on growth figures,” according to Polkinghorne.
Due to the continually expanding pie of the Chinese economy over the years, China’s contribution to the global economy will be no less than 30 percent this year should the GDP reached its targeted goal, the expert Li said, noting the country’s status as the major trading partner with 140 countries in the world guarantees the drive for global economy.
The most buoyant economic activity is expected in Asia, with China’s reopening expected to drive a significant rebound for the country and to bolster activity across the continent, according to the WEF report in May.
The Davos forum takes place amid a whirlwind of diplomatic events with the visits by prime ministers from four countries including Barbados, New Zealand, Mongolia and Vietnam and the agreements reached on deepening cooperation in multiple sectors, including one between China and New Zealand to tap their upgraded free trade deal.
“The Chinese market is incredibly dynamic and is strategically important to us,” Peter McBride, chairman of New Zealand-based dairy giant Fonterra, told the Global Times in a statement.
Saudi Arabia also reportedly sent a large size delegation including six ministers and vice ministers to the Summer Davos as bilateral cooperation has deepened.
(Global Times)
