CHENGDU — Chinese Vice-Premier Wang Qishan warned yesterday the global economy is in a grim state and that an “unbalanced recovery” might be the best option, at talks where senior US officials said the mood at home toward China was souring.
The remark marked Wang’s second dire comment on the world economy in just a few days. On Saturday, he said a “chronic” global recession was “certain” and China must focus on its domestic problems.
Policymakers globally have expressed increasing alarm at the risks facing the world economy, mainly stemming from financial contagion in Europe.
Yesterday, Singapore and Thailand forecast their economies would shrink in the fourth quarter and Japan posted a much bigger fall in October exports than expected.
“Global economic conditions remain grim, and ensuring economic recovery is the overriding priority,” said Wang, the top official steering China’s financial and trade policy, at the start of the second day of talks.
Wang, speaking at the annual US-China Joint Commission on Commerce and Trade, or JCCT, in the south-west Chinese city of Chengdu, also said China and the US should work together to achieve balanced economic growth.
But his comments also suggested that Beijing should attend to bolstering China’s own growth before it worried about global imbalances — in other words, that a strong Chinese economy that brings a continued trade deficit with the US would be better for the world economy than a slowdown in China itself.
“An unbalanced recovery would be better than a balanced recession,” he said.
“As major world economies, China and the United States would make a positive contribution to the world through their own steady development,” Wang told dozens of trade, investment, energy and agricultural officials from each government seated in a conference hall.
Wang’s Saturday comments on the global economy were the most downbeat to date from a senior Chinese policymaker and weighed down Chinese and Hong Kong stocks yesterday.
World markets were also weak, over worries about the eurozone debt crisis, which represents the biggest threat to the world economy.
“The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic,” Wang was quoted as saying by the official Xinhua news agency.
China’s growth is slowing – down to 9,1% in the third quarter from 9,5% in the second-quarter and 9,7% in the first quarter, but the rate remains within the government’s comfort zone.
After tightening monetary policy to fight the threat of inflation, the central bank has since loosened its grip on bank credit in a bid to support cash-starved small firms and pledged to fine-tune policy if needed as economic growth slowed down.
“It’s clear now that Beijing is ready to make policy fine-tuning (to support growth) at a time when the overall domestic and foreign economic situation is not optimistic,” said Hua Zhongwei, an economist with Huachuang Securities in Beijing.