World Prosperity Demands Stability

The world economy, which is gradually recovering from a weak performance in the past 10 years, demands stability instead of trade conflict between the two largest economies, experts said at the opening day of Boao Forum for Asia Annual Conference 2018.

The open trade system is crucial to global prosperity and stability is as important as prosperity for both China and the US, who have the largest trade volume in the world, Kent Calder, director of Edwin O. Reischauer Center for East Asian Studies at Johns Hopkins University, said at a media briefing at the Boao forum for Asia in Hainan, China, news outlets reported.

The world economy finally showed positive trend from the gloomy past 10 years with profound growth in global trade, investment as well as GDP made in 2017, Zhang Yansheng, chief researcher of China Center for International Economic Exchanges, said at another media briefing, noting at this turning point, the trade dispute between the two largest economies will damage the prospect of global economy.

Both Calder and Zhang compared the current China-US tension with a similar trade dispute between Japan and the US in the 1980s, which led to Plaza Accord, an agreement signed by five countries to depreciate the US dollar to the Japanese yen and eventually traumatized Japan›s economy.

However, globalization has made China-US trade relations different from that between the US and Japan.

The US firms have tapped much deeper in the trade with China as producers and distributors than in the U.S.-Japan case, for example, noting many US manufacturers assemble their products in China before selling back home, Calder said. Therefore, the deeper inter-dependence indicates the current trade tension brings higher risks for the world economy than the influence made by US-Japan case, according to Calder.

 Emerging Economies

Major emerging economies maintained an upward momentum in 2017 due to a drastic rise in external demand and stable domestic consumption demand. The report, titled ‹Development of Emerging Economies Annual Report 2018’, was released at a press conference of the BFA annual conference, running from April 8-11, Xinhua reported.

The major emerging market economies, defined by the forum as ‘E11’, refer to economies in the Group of 20, namely Argentina, Brazil, China, India, Indonesia, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa and Turkey.

They saw an average GDP growth of about 5.1% in 2017, or an increase of 0.5 percentage points year on year.

The growth was 1.4 percentage points higher than the world›s average, enabling the E11 to continuously take the lead among the emerging-market and developing economies, it said.

The report analyzed their new development in economic growth, employment and income, price and monetary policy, international trade, international direct investment, international commodities, and debt and financial markets.

As the largest emerging economy, China kept a middle-high economic growth of 6.9% in 2017, contributing approximately one third to global economic growth and continuously acting as the largest contributor to the global economy, it said.

Russia and Brazil pulled themselves out of a lingering economic recession and their economic growth turned from negative to positive, according to the report.