A bus attendant (central) teaches passengers how to pay bus fare with a mobile phone in Beibei District in Chongqing Municipality on Aug. 3, 2017. China sets the pace for digital commerce. The country’s success story is deeply entwined with the fortunes of the global economy. (XINHUA)

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China’s growth rate in 2018 is projected to be 6.4 percent, according to the World Bank report “Global Economic Prospects” released in early January. With the ongoing recovery in investment, manufacturing and trade, the World Bank forecasts global economic growth will climb to 3.1 percent in 2018.

Growth in 2017 exceeded expectations. As investment growth loses momentum and central banks gradually cancel measures for post-crisis recovery, growth in advanced economies is projected to slow down moderately to 2.2 percent in 2018. The growth rate in developing economies and emerging markets as a whole is expected to increase to 4.5 percent in 2018.

Alice de Jonge, senior lecturer in International Law from Monash University in Australia, said China’s economy should maintain strong momentum in 2018. China’s successful economic reform will allow its economy to “take the lead” in adapting to the ever-changing world. Moreover, China’s efforts to promote sustainable development have made a difference, which may contribute to China’s shift toward a cleaner and more user-friendly economy with high-quality growth, she added.

De Jonge said China has taken on a significant role by funding the development of infrastructure projects. China’s “Belt and Road” initiative will boost both domestic growth and growth in other countries, and China’s global economic influence will expand further in 2018.

The World Bank warns that long-term risks may hinder sustained economic growth worldwide. The First Deputy Managing Director of the International Monetary Fund David Lipton pointed out several major challenges that global markets face. First, the rapid appreciation of assets may heighten concerns about potential financial risks. Second, unexpected developments in monetary policy and exchange rates may alter the sentiment in the capital market. Third, rising geopolitical tensions may raise the possibilities for protectionist action. Fourth, weak wage and productivity growth and population aging in many economies reflects the limited space for further potential growth. Finally, an important portion of global economy is still not experiencing recovery. 

Lipton contended that now is the time to address vulnerabilities that could impede growth and to take comprehensive measures to enable stronger growth. Lipton suggests governments explore structural reform to lift growth potential.

Jim Yong Kim, president of the World Bank, said it is the right time to invest in human and material capital.

Shanta Devarajan, senior director for development economics at the World Bank, said investment and innovation is necessary to tackle the challenges of demographic shift and low productivity growth.

Lipton stressed that “the Chinese success story is deeply entwined with the fortunes of the global economy.” As a hub of the global supply chain, China is a key trading partner for more than 100 countries, attracting many commodity exporters. China sets the pace for digital commerce, leading the innovation in financial tech, robotics and artificial intelligence and expanding global influence in development aid and infrastructure finance. Moreover, as the largest shareholder in the Asian Infrastructure and Investment Bank, China is expected to play a larger role in international institutions, especially now that its currency has been included in the Special Drawing Rights basket.

 

 

ZHAO YUAN is a correspondent with Chinese Social Sciences Today.