China’s Economic Planning Official Sees Risks to Global Growth, Inflation

Bloomberg News, Bloomberg News

Shoppers in the Xintiandi shopping area in Shanghai, China, on Saturday, March 25, 2023. Shanghai's economy, like the rest of China’s, is showing tentative signs of improvement. Spending on food and drink is on the rise, and airports are increasingly busy after borders reopened. Photographer: Qilai Shen/Bloomberg , Bloomberg

(Bloomberg) -- China is facing a more challenging global economic environment as growth slows and countries like the US struggle to contain inflation, a senior official at the nation’s economic planning agency said.

Global growth lacks momentum and downward pressure is rising, Zhao Chenxin, vice chairman of the National Development and Reform Commission, said at the Boao forum in Hainan on Wednesday. It’s very uncertain whether the US and Europe can curb inflation, he added.

Zhao was speaking on a panel about the global economic outlook alongside speakers like Justin Lin, a former World Bank chief economist, and Ahmed Saeed, vice president of the Asian Development Bank.

Lin said China’s exposure to the US banking crisis is still limited, noting low external debt and capital controls that have regulated cross border flows. Speaking after the panel, he said China’s solid growth potential means it will be a source of stability for the world economy if the banking crisis worsens.

The panel also discussed the need to cooperate on green technologies and how to cope with disruptions from artificial intelligence.

Zhao made the following additional comments:

The anti-globalization trend has increased. Some countries are forming allies, decoupling with others, and using restrictions to disrupt the global economic and investment landscape
The global financial system’s fragility is increasing, and the Silicon Valley Bank crisis will need to be monitored
The development of new technologies and the transition to a green economy are creating new opportunities for global growth
He called for more channels for countries to communicate and form consensus in order to increase global cooperation

During a discussion about artificial intelligence and tools like OpenAI’s ChatGPT, Lin said it was important to embrace new technologies even though the improvement in productivity will come with challenges. He referred to the beginning of the industrial revolution, when there were similar concerns over job losses — yet over time, labor conditions improved and working hours shortened significantly, he said.