Is the world economy recovering or growing? Expert: Focus should be placed on these changes

On September 9th, the press conference for the new book "The Stumbling World Economy" and the theoretical seminar on the 10th anniversary of the Free Trade Zone were held at the Shanghai Academy of Social Sciences.

The Secretary of the Party Committee of the Shanghai Academy of Social Sciences stated in his speech that the world economy has undergone multiple severe tests in the past three years. Currently, there is much discussion in academia on whether the world economy is recovering or growing. In this regard, we cannot only look at it from the past two to three years, but should analyze it from the perspective of the long-term economic cycle since the 2008 global financial crisis. We should focus on changes in globalization mechanisms, global industrial chain restructuring, and international division of labor systems. This year marks the 10th anniversary of the pilot free trade zones. So far, the number of pilot free trade zones in China has reached 21, basically forming a reform and opening up innovation pattern covering the east, west, north, south, and central regions. How to better sail the future pilot free trade zones and how institutional openness can play an important role in the practical operation of the future development of free trade zones require experts and scholars to contribute more insightful insights.

Zhao Beiwen, Deputy Director of the Institute of World Economics at the Shanghai Academy of Social Sciences, introduced the relevant information of the new book "The Stumbling World Economy: New Patterns, New Risks, and New Opportunities". The book focuses on "new trends and characteristics of the global economy in 2021-2022", including new situations after the outbreak of the Russia-Ukraine conflict in February 2022. The book summarizes the four new characteristics faced by global economic governance under the new pattern: firstly, the mechanism of global economic governance is shifting from a single center to diversification; Secondly, the scope of global economic governance has expanded from traditional fields to emerging fields; Thirdly, the regulation of global economic governance has begun to extend from international to domestic; The fourth is that the Western and Chinese models of global economic governance are moving towards convergence through collision, dialogue, and interaction.

At the meeting, Lian Ping, Chairman of the China Chief Economist Forum and Vice President of the Shanghai Economic Society, and Professor Sheng Bin, Vice President of Nankai University, delivered keynote speeches on "Is there still room for expansionary macroeconomic policies" and "Global economic changes and order reshaping".

Lian Ping believes that whether the current round of recovery of the Chinese economy can continue to fluctuate along the potential growth level, the next crucial issue is whether China's macroeconomic policies can play their role well. At present, the overall macroeconomic policy, including fiscal policy and monetary policy, has an expansionary tone. From the perspective of expansionary fiscal policy, there may be further efforts to improve efficiency in the next stage. In the coming period, monetary policy will still use three types of tools: quantity, price, and structure, and promote good coordination among them to maintain a relaxed financial environment, especially to reduce the difficulty of financing and borrowing costs for enterprises and residents. In the future, expansionary monetary policy also needs to balance the stable operation of the banking system and the basic stability of the RMB exchange rate.

Sheng Bin pointed out that from the perspective of global economic changes, the focus should be on four aspects: first, from deleveraging to deleveraging; second, from globalization to anti globalization; third, security, geopolitics and values; and fourth, digital transformation. Reshaping the global economic order includes three dimensions: power reshaping, structural reshaping, and rule reshaping. He specifically pointed out that in digital rules, cross-border data flow is a core issue for the future and a focal point in the current new international economic and trade rules. Corresponding to the productive global value chain, the digital age requires the construction of a service-oriented global data value chain. However, data issues also involve many issues such as security, politics, ideology, culture, etc., which will bring about many deep competitions and games.

The attending experts had in-depth exchanges and discussions on the direction of the world economy, the risks and challenges it faces, the reconstruction of international economic and trade rules and the construction of free trade pilot zones, institutional openness, and the construction of a higher level of open economic new system.

Researcher Zhang Youwen from the Institute of World Economics at the Shanghai Academy of Social Sciences believes that focusing on China's economic growth is a core and fundamental issue in our research on world economic growth today. "As we all know, the Chinese economy accounts for 17% -18% of the world economy. In other words, if China is one percentage point higher or lower, the world will be 0.18 percentage points higher or lower. The IMF predicts that the world economy will grow by 3% in 2023, while China will grow by 5%. If both goals are achieved, China's contribution to world economic growth will be 30%, surpassing the United States." In this sense, the world will influence China, and China will have a deeper impact on the world.

Professor Sang Baichuan, Dean of the Institute of International Economics at the University of International Business and Economics, pointed out that since the establishment of the Shanghai Pilot Free Trade Zone in 2013, the zone has done a lot of basic institutional innovation work in investment liberalization, trade facilitation, financial openness and innovation, and can be said to have effectively played the role of a reform pilot zone. However, in practice, some problems have also been exposed, such as insufficient systematization and synergy of institutional innovation, the need to improve the depth of institutional innovation, insufficient independent authority for reform and innovation, and gaps in the economic and trade rules for elevation standards.

Why is there a connection between the construction of international economic and trade rules and the pilot free trade zones? Researcher Huang Peng, President of the Shanghai WTO Affairs Consulting Center, believes that the process of constructing international economic and trade rules is actually the process of countries opening up to the outside world through trade liberalization negotiations. The future construction of the pilot free trade zone may face two challenges: firstly, the implementation of high-level opening up in the pilot free trade zone needs to bypass the geopolitical trap disguised as high standard international economic and trade rules; The second is to change the previous inertia and tackle the problem of truly implementing high-level opening-up while ensuring coordinated development and security.

Researcher Qu Jian, Vice President of China Academy of Comprehensive Development and President of Qianhai Branch, focuses on building a Chinese version of the global supply chain that adapts to the new situation. He believes that in the future, we need to strengthen the security of China's global supply chain network along four extensions: firstly, we need to extend upstream and make up for the broken research and development parts; Secondly, in the midstream selection, focus on manufacturing and creating high value-added links; The third is to extend downstream and actively develop channels and brand service links; The fourth is to expand towards supporting facilities and enter the fields of key components, critical equipment, and critical software.

Researcher Xu Mingqi from the Institute of World Economics, Shanghai Academy of Social Sciences, stated in the summary of the meeting that the pilot free trade zone has taken the lead in institutional innovation and opening up to the outside world, and has also produced many replicable and promotable experiences. However, many innovations are still fragmented, and many reforms are mainly aimed at improving government efficiency rather than pushing forward with the highest standard of international open institutional systems. Therefore, there should be further breakthrough measures in institutional openness in the future. Building a new system of high-level open economy requires collaborative innovation among different departments of the country, accelerating the process of benchmarking against CPTPP, and actively opening up in more difficult times.

This conference is hosted by the Institute of World Economics, Shanghai Academy of Social Sciences.