China slowdown worries FMs, central bank guvs
In a rare move, finance ministers and central bank governors of leading economies have voiced concern over the slowdown of China’s economoy, the world’s second largest, which could pose serious challenges to the growth of the global economy. China after witnessing nearly three decades of double- digit growth has been showing signs of slowness and India has now replaced China as the fastest growing major economy of the world.
As a result of the economic slowdown, the Chinese economic model, traditionally based on manufacturing, investments and exports, is currently transitioning towards a model focused on domestic consumption, services and innovation.
“This rebalancing, which is being implemented in a resolute manner, inevitably affects China’s economic partners, even if it is still too early to determine its precise impact.
Yet, in any event, we will have to be ready to accompany these development,” the French Finance Minister Michel Sapin said in his address to the IMF on Saturday.
German Finance Minister Wolfgang Schauble attributed global economic slowdown to the Chinese slowdown. “This slowdown is related to the necessary ongoing transition of the Chinese economy, to lower commodity prices, to earlier exaggerations and domestic shortcomings in some countries, like insufficient structural reforms,” he said.
British Chancellor of Exchequer George Osborne underscored the shared interest of the international community in supporting China as it grapples to enhance the resilience of banks and corporates and ensure the sustainability of local government finances and credit.
“Structural measures such as state-owned enterprise and financial sector reforms and steps to reduce excess capacity will support China’s economic transition,” said US Treasury Secretary Jacob Lew. China’s economy grew 6.7 per cent in the first quarter of 2016, the slowest in seven years, to reach 15.9 trillion yuan ($2.4 trillion), the government said last week.