The economy in the new normal
Date: 2015-03-30 News Sourse: Financial Times
Chinese leaders focused on the consequences of slowing economic growthduring a meeting with world leaders this weekend as China’s central bank governor warned over fears of deflation.
“Inflation in China is also declining. We need to have vigilance if this can go further to reach some sort of deflation or not,” said Zhou Xiaochuan the governor, speaking on Sunday at China’s annual Davos-style economic forum in Boao, on the Chinese island of Hainan.
The annual meeting is an opportunity for world leaders, policy wonks and business executives seeking to curry favour with Beijing.
Speeches and broadcast interviews focused on China’s slowing economy, which is predicted to grow 7 per cent this year, compared with 7.4 per cent last year, the lowest level in more than two decades.
President Xi Jinping, in the keynote speech on Saturday, highlighted two regional initiatives aimed at shoring up trade and investment with China’s neighbours, as he admonished the world not to be too concerned with the cooling economy.
“China’s economy shouldn’t be viewed only by its growth rate,” Mr Xi said. “China’s economy entering the new normal will continue to provide countries, including Asian nations, [with] more markets, growth, investment and co-operation opportunities.”
The “new normal” is a buzz phrase invented by Beijing in an effort to lower expectations for the economy, whose growth rate is expected to sow in coming years.
Mr Xi said the Silk Road Economic Belt — first announced by the president in a visit to Kazakhstan in Sept 2013 as a structure to promote trade and economic co-operation in the Asia region — has attracted interest from more than 60 countries and international organisations. The Chinese leader also praised the founding of the Asian Infrastructure Investment Bank, Beijing’s alternative to what it says is US domination of multilateral financial institutions such as the World Bank.
Chinese news agency Xinhua reported that the government will support yuan denominated bond sales in China by countries, companies and financial institutions along the Silk Road belt. China will also urge domestic financial institutions and companies to invest in countries in the region, as well as help expand currency swaps and settlements between these nations, Xinhua said.