The Launch of the IMF Regional Economic Outlook for Asia
2018-05-18 IMI
Mr. Zhang Zhixiang chaired the opening ceremony. He pointed out that the IMF’s biannual World Economic Outlook Report collects data from each of its members, it monitors and guides global economic trends in a timely manner and makes important contributions to the development of the world economy.
President Wang Song gave the opening remarks. He stated that after more than 20 years of hard work, Guotai Junnan has become one of the longest-running, most stable, and most comprehensive leading financial service institutions in China. In the future, Guotai Junan is committed to expand overseas and become an influential comprehensive global finance provider rooted in China. 2018 is certainly a year with both opportunities and challenges, and the theme of this year’s launch of IMF’s Regional Economic Outlook for Asia cannot be more apt. President Wang gave his opinion on how Asia should face the challenges in a global economy, and its intrinsic mid-to-long-term regional problems. First, countries should accept each other’s differences to share prosperity. To go against the tides of globalization is to go against the trends of history and the world, every country should work together by becoming more open, and by implementing structural reforms. These measures will fundamentally help us walk the path of regional and global prosperity. Second, Asian countries should take advantage of the current round of technological and industry-wide revolution. By Taking hold of the trends and keeping pace with the times, many regional mid to long-term problems can be addressed. Third, as Asian countries take hold of the current historical opportunities, they should also be wary of global inflation and a mismatch of the financial cycle, which may bring about financial risks such as the one in 1997.
Prof. Wang Guogang gave his keynote address titled Promote the Steady Development of China’s Economy and Financial System. He stated that the Chinese economy has entered a new era, turning from fast-paced development to high-quality development. In this Era, China should hold to the idea of steady development. As he points out, China’s economy still faces challenges before realizing steady-paced quality development; there is still much work to be done in structural reform, a robust monetary policy needs more specific targeting and flexibility, problems in the financial sector should be addressed in a steady and even-handed manner. Many problems in the financial sector should be addressed with comprehensive supervision that covers all risks, and should go hand-in-hand with the further opening up, innovation, and the development of the financial sector, as well as support deleveraging and cost reduction.
Mr. Alfred Schipke and Ms. Zhang Longmei gave a presentation on 2018 Regional Economic Outlook for Asia, themed Good Times, Uncertain Times: A Time to Prepare. In his presentation, Mr. Schipike talked about outlooks, uncertainties, monetary policies and trade. He pointed out that Asia is still the fastest growing region in the world, and its short-term outlooks are strong, which is in line with expectations. Although inflation is rising, it is still at a low level. Asia currently faces great uncertainties regarding the normalization of monetary policy, trade outlooks, and spillover effects of the US tax reform. The slowdown in China’s economy will also have negative spillover effects on Asia and other countries around the world. Ms. Zhang Longmei’s talk centered on taxation, geopolitics and policy. She believes that the US tax cuts and employment policies may affect Asia in many ways. The direct spillover effect of an accelerated US economy is positive but relatively small. At such a time, policy in Asia should be conservative and focus on policies that accumulate buffers and improve resilience.
In his keynote speech, Mr. Hua Changchun believes that from the market’s perspective, it is necessary to take advantage of both uncertainties and investment opportunities. Although trade frictions have great impacts on the mood of the market, it is difficult to suppress the rise of China’s high-end manufacturing. As a result, China’s economy remains relatively stable. Trade friction between China and the US is a long-term issue. A comprehensive trade war is not the best choice for either party. He also suggested that asset allocation should grasp uncertainties and focus on investment opportunities brought by inflation and reinflation.
Professor Zhao Xijun gave the concluding comments. He pointed out that global economy has entered a recovery stage, the economy can even be said to have turned around. However, different walks of society hold their own options as to how well this recovery is doing. From the Chinese economy’s perspective, China doors will remain open for a long time, and its goal for economic transformation is also very clear: a change from high-speed development to high-quality development, from expansion in scale to improvement in quality, from disregarding cost to incorporating cost and efficiency. Even though intermediate costs are rising, opportunities still exist.
The roundtable discussion was moderated by Mr. Li Shaojun. During the discussion, Mr. Alfred Schipke stated that the upward and downward risks of the global economy will be relatively even in the flowing quarters. Some changes in short-to-midterm events may potentially slow the economy down. If the risks in infrastructure investments can be reasonably addressed, then the economy will turn around. Mr. Wei Benhua stated that the Asia-Pacific economy faces uncertainties, China needs to adjust its over-reliance on investment-driven economic growth model, and shift towards a development that focuses on quality, social benefits and people’s livelihood. China should also strengthen the role innovation and technology play in economic restructuring and continue to maintain project quality and advantages. Prof. Qu Qiang believes that China’s economy has long-term momentum, but deleveraging should not proceed too quickly. He compared risks in the financial system as the nominator, and economic growth as the denominator, if the denominator decreases, then the overall economy will decline. Mr. Hu Yuwei stated that while the US, in relaxing regulation on the financial sector, has provided an important driving force for US economic development, the implications of that relaxation still needs further observation. Ms. Zhang Longmei expressed the opinion that on the one hand, emerging economies need to address challenges caused by US normalizing its monetary policy, on the other hand, they must also guard against the risk of falling into the “middle-income trap”. Policymakers must implement macro-prudential policies to prevent future risks in asset price fluctuations and encourage structural adjustments by encouraging technological innovations. Qin Han stated that the as new asset regulation policies come forth, and China moves away from implicit guarantees, downward expectations will be generated regarding risk-free interest rates. Looking to the future, China’s economy will be relatively stable, with inflation as an important issue, however, it should not constrain asset pricing in the short term.
