Business / Economy

China's steady economic development helpful to the world: Australian economist

(Xinhua) Updated: 2016-07-23 10:46

CANBERRA - This is not a good time for global economic development so China being steady is quite helpful to the world, Australian economist, former ambassador to China Ross Garnaut told Xinhua in an exclusive interview.

At the launch of the annual book on Chinese economy by the Australian National University on Thursday, Garnaut said China being part of the discussion about global economic difficulties is absolutely essential because China is now such an important part of the world's economy.

Garnaut would not agree that the world's economy is struggling with the aftermath of the 2008 global financial crisis. He regarded the global financial crisis as a result not a cause to the world's economic problems.

"In the developed countries, growth has been harder in the 21st century. Productivity growth has been slow. Developed countries got aging populations. Unless they have quite a lot of immigrations like Australia which can help avoid aging. But those who don't have a lot of immigration, like Japan and Europe, are experiencing economic stagnation."

He said the whole developed world is experiencing low rate of growth, with low business investment.

"If you look back, this has been going on since the beginning of the century. That was obscured for a while by housing and consumption boom fuelled by bank lending in the United States, Britain, part of Europe such as Spain, and that ended with a financial crisis. The financial crisis was not so much of the cause of what has happened there. Financial crisis is the end of the boom that obscured the underlying realities."

"Now we have to think very hard about those underlying realities ... These are unusual times and we have to think harder than usual about what to make it happen."

As for China, one of the world's major economic drivers, Garnaut said things have been going steadily over the past year.

"Last year, there was a fair bit of panic about the stock market, whether the slowdown of the Chinese economy is going too much. What has happened over the last year has been an introduction of a bit of steadiness. There is not much panic now."

"There was a time late last year when observers were a bit worried that road might go too far down. But since early this year, we saw a fiscal and monetary expansion that put a floor on the growth to ensure the growth will stay within the government's target rate."

He said that the steadiness in China is actually in contrast with the panic around the world at the moment. This is not a good time for global economic development so China being steady is quite helpful to the world.

As for the upcoming G20 summit to be held in Hangzhou, China, in September, Garnaut, Australian Ambassador to China from 1985 to 1988, said Hangzhou is a peaceful city and it's a good place to have a G20 meeting at a time when the world is not very peaceful.

"I think this is a very dangerous time for globalization. Globalization is cooperation of people from different countries, different cultures, different races, different religions in economic sphere of trade and investment, but also in cultural sphere. It's essential for the success of the modern world."

"Culturally in recent time, we see a breakdown in international cooperation. I myself think it's very sad that British people voted to leave Europe. It's a trend against history. We need to break down barriers not to increase them," Garnaut said.

He said the worries about terrorism can break down confidence and trust in international relations.

"This is very important time for the leaders of the world to take steps to reaffirm their commitment to open policies, open on economies, societies and culture, to reestablish trust among people from different societies and different levels of development. It's a time to reaffirm commitment to open trade as close as possible to free trade. Free trade for the whole world, not discriminatory to some groups of countries."

"If China is able to bring that commitment to true globalization through its leadership in G20, it will do a good job," he said.

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