Business
08:53, 31-Dec-2017
Movers & Shakers: Chinese and world economies in 2017 and the coming 2018
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As 2017 comes to an end, “Global Business” reviews the economic trends of China and the rest of the world in 2017, and forecasts developments in 2018.
China’s economy: Good momentum with active risk control, economic reforms will continue
China managed to maintain stable growth while improving its quality and efficiency this year. Joe Ngai, managing partner for McKinsey’s greater China office, said China’s economic performance in 2017 has been in accordance with expectations, but “more robust than previously anticipated."
The International Monetary Fund (IMF) and World Bank both raised China's growth outlook for 2017 to 6.8 percent.
The World Bank report said that China has created almost 11 million new jobs in the first three quarters, boosting household income and consumer spending. Furthermore, higher demand for Chinese goods as well as policies targeting financial risks also provided momentum.
“With such kinds of growth for such a long period of time for 1.3 billion people, there is no reason not to praise China’s economic performance,” said John Gong, an economics professor the Beijing-based University of International Business and Economics. “Very few countries in the world can achieve such kind of growth at such a large scale and for such a large economy. Our growth rate [in the past 30 years] is unprecedented.”
But downsides exist, among which financial risk is the top concern. Therefore, authorities have kept the credit growth of banks on a shorter leash, rolling out 11 documents aimed at controlling structured bank loans and off-balance sheet wealth management products since last December.
VCG Photo
VCG Photo
John Litwack, the World Bank's lead economist for China, spoke highly of the Chinese government’s efforts, saying, “We think the policies toward deleveraging, toward getting credit growth under control, seem to be very effective.”
“We've seen a range of measures across the financial sector, by all the various regulators, and we've already seen success,” James Daniel, assistant director for IMF’s Asia and Pacific Department, shared a similar opinion with CGTN.
Entering 2018, Gong expected to see government continue “those active policies and measures to contain risks,” while Hong Hao, chief strategist of BoCom International expected that “quality will continue to improve, consumption will contribute even more to the economy, and quality of life and better environmental conditions will be a trend in the coming year.”
Global economy: turned up in 2017, faster recovery in 2018
The global economy had an uptick in 2017, evidenced by many international institutions' upbeat forecasts. The IMF revised upward its growth forecast to 3.6 percent in its latest Global Economic Outlook. At the same time, all 45 countries tracked by the OECD are expected to have positive growth this year.
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VCG Photo
As for the US economy, 2017 has been a splendid year. GDP growth rates hovered at over three percent – a phenomenon for such a big economy. The stock market has been hitting record highs, while the unemployment rate stands at 4.1 percent, a 17-year low. The Federal Reserve proceeded with three rate hikes. In addition, a tax bill that will cut corporate and individual taxes by 1.5 trillion US dollars in the next decade has been approved.
Does the credit go to US President Donald Trump, who is in the first year of his presidency? Some analysts might vote “No.”
“The US economy has done very well, but I think it would have done well under any candidate, since a lot of things the happened economically are staged two or three years behind you,” said Current Affairs Commentator Einradar Tangen.
“The economy is recovering before Trump actually took office,” agreed Gong. But Gong said Trump could enjoy the “fruit” of the latest tax bill because it might be the only legislative success for Trump, and probably the only meaningful achievement so far since he took office.
As for the upcoming year, the Fed has expressed strong confidence in the US economy, and so is expected to raise interest rates three times.
Meanwhile, Gong predicted that the US would also benefit from the tax bill. “The tax bill will help attract overseas funds from countries like Colombia and Ireland coming back to the US. And for next year, I think Trump will emphasize on infrastructure buildup, so there will be more investment on the infrastructure side.”
VCG Photo
VCG Photo
As for Europe, 2017 witnessed Germany’s right-wing nationalists rising to become the country's third largest political power after its federal election. Moreover, this year saw the UK scrape pass the first hurdle in the Brexit negotiations and onto the next for 2018.
Official data showed that UK’s third quarter’s GDP growth rate stood at 1.7 percent, the slowest in over four years. Also, weak currency, inflation and narrowing income rises limited consumer spending during the same period, which expanded at the weakest pace in five years.
However, there is another side to the Brexit story – it represents a good opportunity for China and the UK to strengthen trade and investment cooperation.
“I think as we move out of the EU, we can have stronger bilateral trading arrangements. We don't have to move at the speed of the other 27 countries when it comes to our trade arrangements. I do think that China presents a very big opportunity for both our countries,” Lord Sassoon, the chairman of the China Britain Business Council, told CGTN earlier this month.
For 2018, the IMF and the OECD expect the global economy to grow at 3.7 percent while the World Bank forecasts moderate growth of 2.9 percent. A quicker pace of recovery in the developed economies is expected to come, and the global market is expected to enjoy one of the best years in a long time next year.
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