Work­ers should share global pros­per­ity

China Daily (USA) - - VIEWS - ByWANG MINGJIE in Lon­don wang­mingjie@mail.chi­nadai­lyuk.com

A Hangzhou char­ter for fair growth and re­spon­si­ble cap­i­tal­ism would give the G20 Lead­ers Sum­mit a much-needed sense of pur­pose, ac­cord­ing to an econ­o­mist with a Lon­don think tank.

The sum­mit sees gov­ern­ment lead­ers and cen­tral bankers from the world’s largest economies meet to ex­change views on eco­nomic pol­icy.

Alan Wheat­ley, as­so­ciate fel­low for in­ter­na­tional eco­nom­ics at Chatham House, said one of the key in­gre­di­ents to push for a new round of world eco­nomic pros­per­ity is to in­crease the share of global in­come that goes to work­ers rather than to com­pa­nies.

“Coun­tries like Ja­pan, Ger­many and the United States are good ex­am­ples that too much of na­tional eco­nomic in­come goes to the cor­po­rate sec­tor, and not enough to the la­bor sec­tor. As a re­sult, peo­ple don’t have enough spend­ing power, and there­fore the de­mand for in­vest­ment is sub­dued,” he said. “If you are a fac­tory owner, why would you build a new fac­tory if peo­ple do not have the money to spend on your prod­ucts.”

Wheat­ley thinks China is do­ing a good job in re­bal­anc­ing its econ­omy to­ward ser­vices and con­sump­tion in­stead of in­vest­ment, as the ter­tiary sec­tor is grow­ing while in­vest­ment is fall­ing, but he said the na­tion can do an even bet­ter job by ac­cel­er­at­ing the trend.

To do that, Wheat­ley sug­gested that the Chi­nese gov­ern­ment in­vests less in hard in­fra­struc­ture and more in so­cial in­fra­struc­ture, such as health spend­ing, ed­u­ca­tion and so­cial se­cu­rity, so that peo­ple can have the con­fi­dence to spend more and save less as they grow older.

He cred­its China’s con­certed ef­forts to en­gage in global eco­nomic gov­er­nance, say­ing the in­ten­tion is ad­mirable and wel­come, but he is keen to see more prac­ti­cal pro­pos­als as to how that goal could be achieved.

He does not ex­pect a big de­par­ture on eco­nomic pol­icy in Hangzhou, as the G20 “is best suited to act in an acute cri­sis, and it has proved it­self as a use­ful fo­rum for an emer­gency such as the 2008 fi­nan­cial cri­sis, whereas now what we are wit­ness­ing is a phase of chronic eco­nomic sta­tus, not lifethreat­en­ing.”

Com­ment­ing on Bri­tish Prime Min­is­ter Theresa May’s pres­ence in Hangzhou, Wheat­ley said that the G20 could be a great op­por­tu­nity for May and Pres­i­dent Xi Jin­ping to get to know each other and to start the re­la­tion­ship on a pos­i­tive foot­ing, and a po­ten­tial plat­form to sig­nal May’s stance on China.

Alan Wheat­ley, as­so­ciate fel­low for in­ter­na­tional eco­nom­ics at Chatham House

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