Macro-Finance Salon (No.98): US Trade War with China and China’s Economic New Normal

On Sep. 10th, Macro-Finance Salon (No.98) jointly organized by IMI and the School of Finance of Renmin University of China was successfully held in conference room 801 in Mingde Main Building. Chen Xingli, the visiting fellow at East Asian Research Institute at the National University of Singapore, delivered a speech themed on “US Trade War with China and China’s Economic New Normal”. Participated in discussion were Chen Weidong, director at Institute of International Finance of Bank of China, Wei Benhua,former deputy director of the State Administration of Foreign Exchange, Zhao Xijun, the deputy director of the School of Finance at Renmin University of China, Zhao Changhui, Chief Country Risk Analyst at Export-import Bank of China. Guests presented in the meeting also included Li Jing, professor at the economy college of Capital University of Economics, Lin Yongsheng, deputy director at the economics and resource management institute of Beijing Normal University, Wang Bin, chief macroeconomic analyst at the investment banking department of ICBC, Wang Xiaolu, deputy director of national economic research institute at China Reform Foundation, Mr. Zhou Siyi from the Beijing municipal government economic research institute. The meeting was chaired by Zhang Zhixiang, member of IMI Academic Committee, former Director-General of International Department, PBoC and Former Executive Director for China in IMF. Chen’s speech included mainly six issues: focuses and concerns of China and America, economic impacts to both countries, current situations, China’s 30 years of reform and opening-up, China’s economic new normal and reform opportunities in trade war threats. Chen first analyzed the two countries’ share of trade goods and then concluded that if trade war escalates, America’s economy may lose more, but he admitted that China would face greater pressure in inflation and more new challenges due to weak industrial technologies. He believed that political and economic factors are intertwined in a trade war, at the beginning of trade war, political factors have stronger influence, but in the end, the result depends on economic factors. He then analyzed some problems in China’s economy since the reform and opening-up, such as the disparity between the rich and the poor, deleveraging, lacking of vision in businesses, imbalances in industrial structure and bubbles in housing market. He believed that the way out of these problems is to reform the whole industrial system. At last, he talked about the economic new normal. He thought that the slowdown of growth is in line with the economic laws and poses great challenge in government’s regulation ability. China’s economic development is imbalanced in terms of deferent industries. In some old industries, China may be lagging behind, but in some new industries, China is in a leading role. With the forth industrial revolution arriving, trade war may be a great opportunity for China’s development. In the discussion sector, guests discussed some hotspot issues such as financial risks and debt crisis under the present trade fraction, transformation of world economy, flexible solutions of trade war, investment efficiency and structure of government and businesses, global public goods shortage, expanding army and armament, influence of belt and road initiative in trade war, as well as China’s images as a major creditor nation. Macro-Finance Salon was jointly founded by IMI and the School of Finance of Renmin University of China. The salon is a platform that enables high-level academic discussions. It has mainly four columns, namely Policy Experts, Prestigious Scholars, Industrial Elites and Young Scholars. Since its establishment, following the goal of thinking global, acting local, the salon has become a high-level, professional and open platform in promoting “macro-finance” studies and boosting academic exchanges in “macro-finance” theories and policies. The idea of “macro-finance” is inspired by professor Huang Da and his proposition of combining macro- and micro-financial theories, and backed by the idea that finance and real economy are two integral parts of economic system. Chen Yulu, vice president of the PBC, illustrated the basics and methodology of “macro-finance” in Outlines of Macro-Finance. His illustration has set theoretic and empirical basis for “macro-finance” system, which will benefit long-term economic growth and national strength.

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