Rudd: China has capacity to ensure growth
Print Edition
Former Australian Prime Minister Kevin Rudd dismissed claims that China’s growth is unsustainable as he predicted a “medium to medium-high” expansion.
Speaking in Shanghai yesterday, the politician said his forecast takes into account both official and unofficial statistics on recent performance, as well as lower levels of global demand for Chinese exports and high levels of domestic debt.
A shrinking labor force, continued high levels of domestic saving, modest levels of household consumption, an expanding private sector, and a growing environmental crisis will also be major factors, he said.
The forecast also takes into account a vast battery of Chinese policy responses to each of these and does not assume that these are by definition destined to fail, Rudd said.
“Furthermore, if growth falters, China has sufficient fiscal and monetary policy capacity to intervene to maintain it above 6 percent,’’ he told the city’s Institute for International Strategic Studies.
Rudd, who was Australia’s prime minster from 2007 to 2010 and again in 2013, said he is optimistic about China’s transformation from an old economic growth model — based on high levels of state infrastructure investment and low-wage, labor-intensive manufacturing — to a new model based on household consumption, the services sector and a strong and innovative private sector.
Moreover, to assume China’s seasoned policy elite will somehow prove to be less capable in meeting the country’s next set of economic policy challenges than they have been over the past 35 years is “just plain wrong,” he said.
China faces a bewildering array of policy challenges and it’s possible that any one of them could derail the government’s economic program, he said.
But it’s equally true that China’s policy elite are more sophisticated now than at any time since the current period of reform began in 1978, Rudd said.
“This is a sophisticated policy blueprint developed over many years, which is necessary to secure China’s future growth trajectory through different drivers to those that have powered growth in the past,’’ he said at a presentation of his report on Sino-US relations.
“There is also a high level of political backing to drive implementation. The process and progress of implementation has so far been reasonable,” he said.
China’s GDP, after decades of rapid growth, and despite recent slowing, will surpass that of the United States over the next decade, he said.
Rudd said he envisages a cooperative scenario in an increasingly globalized economy, with growing interdependencies between the US and China.
This will encourage both leaderships to avoid any possibility of armed conflict, focus on their respective domestic policy priorities and maintain a geopolitical status quo in the region, he said.
Rudd said he thinks that China’s political, economic and foreign policy influence in Asia will continue to grow, while on the world stage, the country will become a more active participant.
China is committed to becoming an active player in the reform of the current global order, he said.
“What we will see is an increasing tempo in China’s multilateral policy activism, and a growing range of Chinese institutional initiatives. This represents a new, forthright Chinese voice in the world,” he said.
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