In a rare move, leaders from the financial and economic sector voiced their concern about the state of the Chinese economy.
Their concern is not just over the economic condition of China, but its implication over the global economy.
The Chinese economy is the second-largest economy is an integral part of the global economy. If anything, fatal happens, it will affect the global economy.
For nearly three decades, the nation has witnessed double-digit growth. But this has been slowing down lately because of various factors ranging from the pandemic to the energy crisis.
Because of this India, has replaced China as the fastest-growing economy.
The Chinese economy is based on manufacturing, investments and exports. Because of the slowdown, they are in transition towards domestic consumption, services and innovation. But even that is pulled down by regulations, energy crisis and blacklisting.
According to French Finance Minister Michel Sapin, this shift will affect the economic partners of China too, even though it is still early to determine its impact. But the minister assured them that they are ready to face any circumstances.
At the same time, the German Finance Minister, Wolfgang Schauble, said that the global economic slowdown is because of the transition in China. This will lead to lower commodity prices, earlier exaggerations and domestic shortcomings in some countries.
The British Chancellor of Exchequer George Osborne, underscored the importance of shared interest by the international community to support the Chinese in their effort to improve the strength of its banks and corporates and protect the economy.
US Treasury Secretary Jacob Lew said that structural measures in reforming state-owned enterprises, reforms in the financial sector and measures to reduce excess capacity, will reduce the transitory crisis.
In 2014 China’s GDP grew by 7.3%. In the first quarter of 2016, it dropped 6.7%. In the previous quarter, it was 6.8%. Last year it was 6.9% lowest in over two-and-a-half decades.
Alexandre Tombini, Governor of Central Bank of Brazil, said that the volatile Chinese currency, weaker-than-expected Chinese growth and continuous capital outflows lead to growing anxiety, despite the buffers in emerging markets and developing countries (EMDC).
However, the Chinese leaders have assured the world leaders that there is nothing to worry about and, the dragon economy still stands strong. Xiaochuan Zhou, Governor of the People’s Bank of China, has assured them of their strength.
In his statement at the IMF meeting, the Chinese economic growth is firm, with indicators showing positive signs. The GDP grew by the rate of 6.7% in the first quarter and 10.7% stable growth in the retail sales of consumer goods.
According to him, the growth is slowing but the structure and quality have improved. Strong enough to support long-term growth. He also added that the government will strengthen structural reforms.
This will be done flexibly and appropriately for better and sustainable economic growth.
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