Isolation From Globalization Won’t Work, PBOC Deputy Yi Warnsby
Policy makers should address problem of uneven growth, incomes
Yi says he has more confidence in stability of China’s economy
Instead of rolling back economic integration, policy makers should address problems stemming from globalization and heed the concerns of people who haven’t benefited, a senior Chinese monetary official said.
“If you look at the Great Depression history, if you look at the competitive devaluation history, if you look at the currency war history and isolation history, none of them worked,” Yi Gang, deputy governor of the People’s Bank of China, said on a panel discussion in Washington on Thursday. “While we’ve gained a lot of efficiency from globalization, from free trade, we also have to see problems that growth is not even and income distribution is uneven.”
Yi’s observation adds to a growing chorus of concern that the benefits of global trade aren’t being evenly shared. The International Monetary Fund this week warned that rising political tensions over globalization are threatening to derail a world recovery. China has been on the receiving end of criticism from U.S. Republican presidential nominee Donald Trump, who has blamed job losses and weak wage growth on increased trade with developing countries.
Commenting on China’s economy, Yi said he’s gaining more confidence in the country’s growth recovery. He pointed out that industry profits have increased in recent months, deflationary pressure has eased, while the labor market remains robust.
The overall economy is “more stable” than in the past, he said, adding that China’s gross domestic product will grow between 6.5 percent and 7 percent.
Yi said China, which contributed more than a quarter of global economic growth in recent years, will continue to shift its growth model by boosting domestic consumption. That will help lift imports from the rest of the world, making a “significant contribution” to the global expansion, he said.