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Reform and Opening up to Counter Headwinds

Nov 16-2020   



No matter how the external economic environment shifts and poses difficulties, China should continue to walk down the path of reform and opening up. If all those pressures on China were based on international rules, we ought to be even more determined in pursuing the path because that would fit what we have always wanted to do: integrate into the world economy and international systems, said Prof. Huang Yiping, Deputy Dean of the NSD, in an interview with CDF Insight, the publication of China Development Forum.

 

With multiple uncertainties still plaguing a sluggish world economy, Prof. Huang believed that monetary and fiscal policies can stabilize the economy in the short run but structural reforms are still needed to ensure long-term growth. China should push forward the reform and opening up. He also heads the Institute of Digital Finance at PKU.

 

Globally, monetary easing has been widely and forcefully wielded since the financial crisis. Though the risk of serious inflation is low due to the existence of many ‘mummy firms’, monetary policy is getting harder to wind down and might be worsening some structural conflicts. Abeconomics offered a good example. Its combination of easy monetary policy and active fiscal policy were not enough in driving Japan’s structural reforms much farther – a challenge confronting countries around the world. As such, the world economy runs an uphill battle to regain its pre-financial crisis growth rate.

 

China is working on a new development pattern with two critical pillars: dual circulation and a relatively independent technological innovation system. In other words, the domestic market will provide more impetus to economic growth, while productive innovation and industrial upgrading will help solve supply-side issues of the circulation. International concerns are overblown, but risks do exist, said Prof. Huang. A balancing act should be struck between continuing reform and opening up and putting the growth focus on the domestic market. It’s also true of tech innovation, which should base on market principles and not on the government pooling all resources to help any particular enterprise.

 

In the past, China undertook international cooperation or joined global systems by accepting the rules. As its economy expands – e.g. its total retail volume might surpass that of the US this year – any of its moves is bound to impact on the global market. Some short-term issues might make international cooperation more difficult. Therefore, initiatives such as the Belt and Road is good way to work with more developing countries. Overall, China should continue its reform and opening drive, despite deepening prejudice on the part of the West since the outbreak of the pandemic. China should undertake some tangible measures to signal its determination in this regard.

 

 

Reform and Opening up to Counter Headwinds

Nov 16-2020   



No matter how the external economic environment shifts and poses difficulties, China should continue to walk down the path of reform and opening up. If all those pressures on China were based on international rules, we ought to be even more determined in pursuing the path because that would fit what we have always wanted to do: integrate into the world economy and international systems, said Prof. Huang Yiping, Deputy Dean of the NSD, in an interview with CDF Insight, the publication of China Development Forum.

 

With multiple uncertainties still plaguing a sluggish world economy, Prof. Huang believed that monetary and fiscal policies can stabilize the economy in the short run but structural reforms are still needed to ensure long-term growth. China should push forward the reform and opening up. He also heads the Institute of Digital Finance at PKU.

 

Globally, monetary easing has been widely and forcefully wielded since the financial crisis. Though the risk of serious inflation is low due to the existence of many ‘mummy firms’, monetary policy is getting harder to wind down and might be worsening some structural conflicts. Abeconomics offered a good example. Its combination of easy monetary policy and active fiscal policy were not enough in driving Japan’s structural reforms much farther – a challenge confronting countries around the world. As such, the world economy runs an uphill battle to regain its pre-financial crisis growth rate.

 

China is working on a new development pattern with two critical pillars: dual circulation and a relatively independent technological innovation system. In other words, the domestic market will provide more impetus to economic growth, while productive innovation and industrial upgrading will help solve supply-side issues of the circulation. International concerns are overblown, but risks do exist, said Prof. Huang. A balancing act should be struck between continuing reform and opening up and putting the growth focus on the domestic market. It’s also true of tech innovation, which should base on market principles and not on the government pooling all resources to help any particular enterprise.

 

In the past, China undertook international cooperation or joined global systems by accepting the rules. As its economy expands – e.g. its total retail volume might surpass that of the US this year – any of its moves is bound to impact on the global market. Some short-term issues might make international cooperation more difficult. Therefore, initiatives such as the Belt and Road is good way to work with more developing countries. Overall, China should continue its reform and opening drive, despite deepening prejudice on the part of the West since the outbreak of the pandemic. China should undertake some tangible measures to signal its determination in this regard.