IMF: China’s ris­ing growth boosts world re­cov­ery ef­fort

China Daily (Hong Kong) - - FRONT PAGE - By ZHAO HUANXIN zhao­huanxin@chi­

China’s ro­bust re­cov­ery from the COVID-19 pan­demic will ben­e­fit im­porters and coun­tries that are oth­er­wise con­nected to the Chi­nese econ­omy, of­fer­ing a “pos­i­tive im­pulse” for world eco­nomic growth, In­ter­na­tional Mone­tary Fund Man­ag­ing Di­rec­tor Kristalina Ge­orgieva said on Thurs­day.

Two days af­ter the global lender re­leased its World Eco­nomic Outlook, which nearly dou­bles its pro­jec­tion of China’s 2020 growth to 1.9 per­cent from pre­vi­ously fore­cast, the IMF chief ex­plained what was be­hind the up­grade and how it will af­fect other economies.

The up­ward re­vi­sion of the growth rate was based on two “very im­por­tant ac­tions China has taken”, Ge­orgieva said.

The ac­tions were “one, to con­tain the pan­demic (with) very de­ci­sive health mea­sures; and two, to pro­vide a po­tent stim­u­lus for the econ­omy in terms of fis­cal stim­u­lus, and in terms of mone­tary pol­icy”, she said at a news con­fer­ence. “And, China con­tin­ues to boost the sup­port for the econ­omy.”

Af­ter lock­downs eased in China in early April, pub­lic in­vest­ment helped boost eco­nomic ac­tiv­ity enough to re­turn to pos­i­tive growth in the sec­ond quar­ter, ac­cord­ing to the outlook re­port.

“This is a pos­i­tive im­pulse for the world econ­omy,” the IMF chief said, adding that it is “par­tic­u­larly im­por­tant” for coun­tries that ex­port met­als and other commoditie­s, where de­mand from China has been a much needed re­lief as com­mod­ity prices are ris­ing.

China’s growth mo­men­tum is also im­por­tant “for coun­tries that are con­nected to the Chi­nese econ­omy through global value chains”, where de­mand from China is an en­gine for growth, she said.

Im­ports by the world’s sec­ond-largest econ­omy rose by 4.3 per­cent year-onyear in the third quar­ter of 2020, ac­cord­ing to cus­toms of­fi­cials. China im­ported 640.86 bil­lion yuan ($95.6 bil­lion) in goods from the United States in the three quar­ters, up 2.8 per­cent on a yearly ba­sis.

“In terms of build­ing con­fi­dence that we can over­come the pan­demic — not only the do­mes­tic mea­sures, but also the fact that China has joined the in­ter­na­tional ef­forts to have a vac­cine — I can­not stress enough how im­por­tant it is. That boosts the con­fi­dence that to­gether we can get out of this cri­sis,” Ge­orgieva said.

Last week, China of­fi­cially joined COVAX, an in­ter­na­tional initiative aimed at en­sur­ing eq­ui­table global ac­cess to COVID-19 vac­cines, be­com­ing the largest econ­omy to sup­port the initiative.

Ge­orgieva said strong in­ter­na­tional co­op­er­a­tion on COVID-19 vac­cines could ac­cel­er­ate global eco­nomic re­cov­ery.

“Faster progress on med­i­cal so­lu­tions could speed up the re­cov­ery; it could add al­most $9 tril­lion to global in­come by 2025. This, in turn, could help nar­row the in­come gap be­tween richer and poorer na­tions. The value of co­op­er­a­tion right now can­not be over­stated,” she said.

Ge­orgieva has, on sev­eral oc­ca­sions dur­ing the IMF/World Bank Group an­nual meet­ings this past week, high­lighted the im­pact of the pan­demic on the global econ­omy, which is ex­pected to con­tract by 4.4 per­cent this year, the worst global down­turn in decades.

“Un­til we have a durable exit from the health cri­sis ev­ery­where, the re­cov­ery will re­main un­even and un­cer­tain. And ob­vi­ously, we want to see that in the rearview mir­ror as soon as pos­si­ble,” she said on Thurs­day.

Thanks to “ex­tra­or­di­nary macroe­co­nomic pol­icy re­sponses”, the global econ­omy is re­cov­er­ing, but the re­cov­ery is “par­tial”, and “marked by sig­nif­i­cant un­cer­tainty”, with con­firmed cases con­tin­u­ing to surge in many coun­tries, in­ter­na­tional fi­nance min­is­ters said on Thurs­day.

“The cri­sis threat­ens to leave lon­glast­ing scars on the global econ­omy, such as weaker pro­duc­tiv­ity growth, heav­ier debt bur­dens, height­ened fi­nan­cial vul­ner­a­bil­i­ties and higher poverty and in­equal­ity,” the In­ter­na­tional Mone­tary Fund and Fi­nan­cial Com­mit­tee, a pol­icy-set­ting panel of the IMF, said in a com­mu­nique.

Kristalina Ge­orgieva

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