Challenges facing the global economy and China's engine role

Editor's note: Liu Chunsheng is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinion, and not necessarily the views of CGTN.

As the International Monetary Fund (IMF) and the World Bank hold their Spring meeting, global economists, policymakers, and investors turn their attention to the many conflicts, issues, and challenges the world economy faces. Geopolitical tensions represent a major challenge to the current world economy.

In recent years, significant changes in the global political landscape, such as the Russia-Ukraine conflict and the Israeli-Palestinian conflict, have led to an accumulation of risks in the international trade and investment environment, increased uncertainties, and had a serious impact on the stability of the world economy, and could even trigger market fluctuations and risks in the financial markets.

Geopolitical conflicts continue to ferment globally, from energy crises on the European continent to the reshaping of the security order in the Asia-Pacific region, all posing significant threats to global economic growth.

Sanctions and countermeasures of certain countries not only directly strike their own economies but also affect the stability of global supply chains through the transmission mechanisms of energy and commodity price fluctuations and financial markets, increasing global inflationary pressures and bringing potential risks to food security and social stability in developing countries.

The spill-over effects of macroeconomic policies in various countries also have a profound impact on the world economy. In the context of global economic integration, changes in the economic policies of countries often have a chain reaction on other countries. U.S. interest rate hikes and cuts may lead to fluctuations in global capital flows and exchange rates, in turn affecting other countries' economic growth and financial stability.

Therefore, when formulating macroeconomic policies, countries need to fully consider the impact of spill-over effects and strengthen policy coordination and communication, in order to achieve the stable development of the global economy.

As the world's two largest economies, the trade friction between China and the United States not only affects the economic performance of both sides but also has a profound impact on the global supply chain, value chain, and production network. Facing these issues and challenges, China, as a key engine of the world economy, showed strong growth momentum in the first quarter of 2024.

According to data from the National Bureau of Statistics, China's gross domestic product (GDP) grew by 5.3 percent year-on-year in the first quarter of 2024, a 1.6 percent quarter-on-quarter increase from the fourth quarter of 2023. At the same time, the total value of China's goods trade imports and exports increased by 5 percent year-on-year. These figures indicate that the Chinese economy has started well in 2024, providing important momentum for the recovery of the global economy.

The stable growth of the Chinese economy has significant implications for the stability and development of the global economy. As the world's largest manufacturing country and one of the largest exporting countries, China's economic growth is essential for the stability of the global supply chain and the smooth operation of the value chain. The stable growth of the Chinese economy also provides a vast market and opportunities for the world, promoting the growth of global trade and investment.

Furthermore, China is actively promoting economic transformation and upgrading, enhancing its innovation capacity and technological level, and also making a vital contribution to the sustainable development of the global economy.

China is actively enhancing the stability and security of the global supply chain through deepening reform and opening-up and strengthening a new development pattern featuring domestic circulation as the mainstay and domestic and international circulations reinforcing each other.

Whether it is pushing forward with the implementation of the Regional Comprehensive Economic Partnership (RCEP) or participating in global infrastructure development initiatives, China is playing the role of a "stabilizer" on a global scale, helping to reduce the impact of external shocks on the global economy.

As the global economic growth engine decelerates, the quest for enduring stability and expansion beckons a slew of strategic reforms. Paramount among these is the efficient allocation of resources to enterprises that drive productivity, a move that would rejuvenate the industrial landscape. Similarly, vital to this endeavor is the amplification of labor force engagement. Countering the anticipated labor shortage and fostering an inclusive job market could synergistically fuel economic output.

Artificial intelligence (AI) stands as a beacon of innovation, possessing the potential to disrupt traditional productivity paradigms. Harnessing AI's transformative power could be a game-changer, automating processes, and streamlining efficiency across sectors. However, looming large over these growth prospects are the twin hurdles of ballooning public debt and the specter of geoeconomic fragmentation, each capable of shackling the trajectory of global economic health.

In this landscape, China's role is increasingly pivotal. Its resilient economy, continuous reforms, and burgeoning technological advancement position it as a counterbalance to these headwinds. As China delves into the deep end of tech-driven economic models, it not only fortifies its own growth but also acts as a catalyst for global economic dynamism. The nation's commitment to open markets and its significant role in international trade further cement its position as an indispensable protagonist in the global economic narrative.

(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com. Follow @thouse_opinions on Twitter to discover the latest commentaries in the CGTN Opinion Section.)