People’s Daily： Emerging economies can learn from China’s experience in three aspects.
After the international financial crisis in 2008, emerging economies have made outstanding contributions to world economic growth and become the engine of global economic recovery. However, in recent years, emerging economies have generally encountered the dilemma of declining economic growth. What are the development status and prospects of emerging economies, and how to solve the development problems? As the world’s second largest economy and the largest emerging economy, what impetus, opportunities and experiences can China provide for emerging economies to get rid of difficulties? Today, several experts’ articles are published to discuss these issues.
— — Editor
Promote structural reform and strengthen international cooperation.
The downward pressure on the economy has increased, but the prospects are still promising (People’s Watch)
Xiong Aizong Zhang Bin
In recent years, the downward pressure on emerging economies has increased. This is not only related to the external environment of slow global economic recovery, but also to the internal structural problems accumulated by emerging economies for a long time. The outstanding task before emerging economies is to adjust the mode of economic growth, explore the endogenous driving force of sustainable growth, and maintain macroeconomic stability and financial market stability.
The downward pressure on emerging economies has increased.
Before the outbreak of the international financial crisis in 2008, the economic growth of emerging economies was on the rise as a whole, and the growth rate of emerging and developing economies was as high as 8.6% in 2007. After the outbreak of the international financial crisis, the economic growth rate of emerging economies began to slow down, but it was still relatively high compared with developed economies, and it became the engine of global economic recovery. For example, in 2010, under the action of economic stimulus measures, the economic growth rate of emerging and developing economies was as high as 7.4%. However, after 2010, the growth rate of emerging economies gradually declined to less than 5% in 2014. At the same time, the gap between its economic growth rate and that of developed economies has further narrowed. In 2009, the economic growth rate of emerging and developing economies was 6.4 percentage points higher than that of developed economies, while it was only about 2 percentage points higher in 2015.
Emerging economies have not only slowed down their growth, but also differentiated their economic performance. In 2015, the economic situation of some emerging economies further deteriorated, especially in Russia and Brazil. In 2015, Russia’s economic growth rate dropped by 3.7% year-on-year, and in the second quarter, the economic growth rate once fell to -4.6%, the lowest in six years, and it fell into the first recession since the international financial crisis in 2008. The situation in Brazil is similar. In 2015, Brazil’s economic growth rate decreased by 3.8% year-on-year, the worst performance in the past 25 years. South Africa’s economic growth is also not good. In 2015, the economic growth was only 1.3%, the lowest since 2010. Emerging economies such as China and India continue to maintain a good momentum of development. In 2015, China’s economy grew by 6.9% year-on-year, which is still in a high economic growth range in the world. India’s economic performance is outstanding, especially after the adjustment of GDP statistics, the economic growth rate has increased significantly, reaching 7.3% in 2015, the highest level in five years.
Reasons for the decline of economic growth rate in emerging economies
Long-term accumulation of structural problems is the internal cause of the decline in economic growth. For a long time, the endogenous sustainable growth momentum of emerging economies has not been fully tapped, and the imbalance of economic structure has become prominent. Before the outbreak of the international financial crisis, thanks to the rapid global economic growth and rising commodity prices, the structural imbalance of emerging economies was covered up. However, with the end of the global economic expansion cycle and the decline of external demand, the lack of endogenous growth momentum in emerging economies has become increasingly apparent, and the imbalance of resource allocation and the distortion of economic structure have become bottlenecks restricting economic development.
The downward trend of commodity prices has aggravated economic difficulties. Many emerging economies, such as Russia and Brazil, are commodity exporters, and commodity exports account for a high share of their total exports and fiscal revenue. In the World Economic Outlook in October 2015, the International Monetary Fund pointed out that the output growth of emerging and developing economies exporting commodities slowed down significantly due to the sharp drop in global commodity prices. According to its estimation, due to the weak commodity prices, commodity exporting countries in 2015— The average economic growth rate in 2017 may be higher than that in 2012— In 2014, it decreased by 1 percentage point. In addition, the lower commodity prices also bring financial risks to emerging economies, such as the deterioration of financial situation and the decline of foreign debt repayment ability.
The adjustment of the Federal Reserve’s monetary policy further worsens the external environment. From the historical experience, the adjustment of the Fed’s monetary policy has a significant negative spillover effect on emerging economies with fragile economic fundamentals. In 2015, the market’s expectation for the Fed to raise interest rates continued to heat up. In December 2015, the Federal Reserve officially announced the start of raising interest rates. Although the current US economy fluctuates and the interest rate hike process has slowed down, the constant adjustment of interest rate hike expectations and the subsequent interest rate hike will lead to currency depreciation and capital market turmoil in emerging economies, further worsening the economic situation in emerging economies.
Accelerating structural reform can usher in a bright future.
Despite the severe economic situation, the economic growth of emerging economies is still at a high level. According to the International Monetary Fund, the economic growth rate of emerging and developing economies will reach 4.1% in 2016, which will still be much higher than the economic growth rate of 1.9% in developed economies. Actively take countermeasures and accelerate structural reform, and the growth rate of emerging economies may gradually recover to more than 5% in the future.
Emerging economies still have great economic growth potential. Emerging economies have obvious labor advantages, and demographic dividend is one of the important factors to ensure their economic growth to maintain a high speed. In addition, most emerging economies are rich in natural resources and energy, which is an important foundation for economic development. With the further development of late-developing advantages and economic development potential, emerging economies will gradually narrow the gap with developed economies in technology and knowledge.
However, it must be recognized that emerging economies still need to make great efforts to turn their economic growth potential into economic growth reality. First, structural reform should be accelerated. In the context of the current economic slowdown, the space for stimulating demand expansion through monetary and fiscal policies is narrowing, and promoting structural reform has become the key for emerging economies to get out of the economic growth dilemma. Relevant reforms should be further accelerated, including further opening to the outside world and integrating the domestic market, increasing investment in education and infrastructure, improving the quality of workers, encouraging technological innovation, and strengthening the construction of industrial and logistics systems, so as to gradually improve the economic structure and change the growth model. Secondly, strengthen international cooperation among emerging economies, actively promote the reform of global economic governance structure, enhance the overall voice of emerging economies in global economic governance, and create a stable international economic environment for economic development. For example, urged developed economies to adopt a responsible monetary policy to maintain global financial stability. At the same time, we should strengthen bilateral and multilateral cooperation among emerging economies, jointly remove obstacles that inhibit sustained economic growth, and alleviate and respond to common risks and challenges. At present, researchers at home and abroad generally believe that China’s economic restructuring is having a positive impact on the world economy. China’s economic transformation and upgrading, vigorously promoting the construction of the "Belt and Road", building a new open economic system and actively participating in global economic governance will have a huge positive spillover effect on emerging economies. The medium and long-term economic prospects of emerging economies are still promising.
(Author: Institute of World Economics and Politics, Chinese Academy of Social Sciences)