DAVOS, Switzerland — Chinese Vice Premier Zeng Peiyan joined a growing chorus of leaders at the World Economic Forum here warning about bleak prospects for global growth this year. He also voiced concerns about protectionist sentiments and inflationary pressures in his country and around the world because of high energy and food prices.
This story first appeared in the January 25, 2008 issue of WWD. Subscribe Today.
The subprime mortgage crisis in the U.S. “has hurt many financial institutions and its adverse impact on countries concerned is starting to be felt,” Zeng said.
“We cannot tell yet how widespread, how long this crisis will be or how much damage it will bring, but we are sure that the global economy faces new challenges to remain stable,” he said.
The Chinese official told about 1,000 top business and political leaders that the country’s real gross domestic product growth rate in 2007 “reached 11.5 percent, and 12 million urban jobs were created.” But he conceded that the world’s fastest-growing economy faces challenges that are aggravated by the high cost of resources, excessive liquidity and price rises.
In the last few years, efforts by Chinese authorities to cool down the economy have failed.
In the area of international trade, Zeng said imbalances have increased the number of disputes and charged that “some countries have raised non-tariff trade barriers and imposed more restrictions on foreign investment.”
Such practices “have a negative impact on the allocation of resources globally, they hurt the interests of exporters, producers and investors, and importers and consumers alike, and will ultimately harm the common interests of all countries,” he said.
On a more positive note, Zeng said China has set its sights on moving up the value scale by improving quality of products and moving away from low-value-added manufactures. He indicated that China is committed to opening up its economy further to foreign competition and noted its seclusion and isolation in the past “only made it backward, and only by opening up and inclusiveness can make it prosper.”