Xi warns of risks to global economy
Print Edition
THE global economy is being threatened by rising protectionism and risks of high leverage are accumulating, Chinese President Xi Jinping said yesterday at the opening of a two-day summit of leaders from the G20 nations.
With the meeting coming between Britain’s vote in June to leave the European Union and the US presidential election in November, observers expect the G20 leaders to mount a defense of free trade and globalization and warn against isolationism.
The global economy is “at a crucial juncture,” Xi said, hemmed in by sluggish demand, financial market volatility and feeble trade and investment.
“Growth drivers from the previous round of technological progress are gradually fading, while a new round of technological and industrial revolution has yet to gain momentum,” he said.
Other leaders attending the summit in Hangzhou, capital of east China’s Zhejiang Province, include Russian President Vladimir Putin, US President Barack Obama, Japanese Prime Minister Shinzo Abe, British Prime Minister Theresa May, German Chancellor Angela Merkel, France’s President Francois Hollande and Indian Prime Minister Narendra Modi.
Xi welcomed each to the summit with a handshake and an extended one with Obama, with both men smiling.
In a circular conference hall in Hangzhou, Xi told the world leaders that the G20 “should work with real action, with no empty talk.”
The G20 brings together representatives of 85 percent of the world’s GDP and two-thirds of its population.
Xi said the global economy “still faces multiple risks and challenges including a lack of growth momentum and consumption, turbulent financial markets, receding global trade and investment.”
He added: “We hope the Hangzhou summit will come up with a prescription for the world economy and lead it back to the road of strong, balanced, comprehensive and sustainable growth.”
He called for more innovation to spur economic growth and reforms to global financial and economic management.
He appealed for cooperation in taxes, anti-corruption and measures to “improve the ability of the world economy to resist risks.”
Chinese officials said earlier that China would propose a plan to boost trade and innovation through regulatory changes and closer government cooperation.
“We should build an open world economy,” the Chinese president said.
“Group of 20 countries should abide by their commitment to avoid taking new protectionist measures, strengthen investment policy cooperation and take effective action to promote trade growth,” Xi added.
China hopes to use its status as this year’s G20 leader to increase its influence in global economic management.
Officials say they want the G20, created to coordinate the response to the 2008 financial crisis, to take on a longer-term regulatory role.
The World Trade Organization is forecasting this year’s global trade growth at an anemic 2.8 percent — its fifth straight year below 3 percent.
Leaders attending the summit have said they will call for “inclusive growth” — a reference to efforts being made to defuse pressure to protect local industries by spreading the benefits of closer global integration to the millions of people who have been left behind by wrenching changes.
Obama stressed that theme at a separate news conference with May.
“We understand that many of our citizens are frustrated by the pace of globalization and feel they’re not experiencing the benefits of international trade,” he said.
“We must all work together to spur economic growth, to boost free trade and build a fairer economy that truly works for all.”
Also yesterday, the head of the European Union’s governing body called for action on China’s steel industry.
The summit “must urgently find a solution” to excess steel production, said Jean-Claude Juncker, president of the European Commission.
Juncker also rejected US criticism of the order for Ireland to collect US$14.5 billion in back taxes from Apple.
An EU panel ruled that Apple improperly received government aid in the form of tax rates that were lower than those paid by other companies. Ireland has made low taxes part of its strategy to attract investment.
“Free trade must be fair trade,” Juncker said at a news conference with Donald Tusk, president of the European Council.
On Britain’s surprise vote to leave the 28-nation EU, seen by some analysts as the first in a wave of moves by other nations to retreat from free trade, Tusk said there would be no talks with London over future relations until it formally begins the withdrawal process.
Uncertainty over the status of trade, immigration and other critical issues has disrupted business activity and prompted anxiety among investors.
“We need to protect the interests of the members of the EU that want to stay together, not the one which wants to leave,” Tusk said.
At the news conference with Obama, May said her government was going ahead with its departure and was looking to create new trading opportunities.
“There will be no second referendum, no attempt to turn the clock back or get out of this,” May said.
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