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Global demand may see upturn in 2020

  • Author:Nancy
  • Source:China Daily
  • Release on:2019-11-13

      Global demand may see upturn in 2020

Global demand may take a turn for the better next year, an official of the country's banking and insurance regulator said on Tuesday.

"A big change in the external environment of China may take place in 2020," Yu Xuejun, chairman of the supervisory board for key State-owned financial institutions at the China Banking and Insurance Regulatory Commission, said at the 17th Caijing Annual Conference in Beijing.

One of the reasons behind the change is that the US Federal Reserve has adjusted its monetary policy since the end of July and cut interest rates three times in a row. The Fed also stopped reducing its balance sheet and began injecting liquidity into the market. This may stimulate a recovery of global demand in the second half of next year and drive global economic growth, Yu said.

Technology breakthroughs and innovation may also lead to the change.

"Artificial intelligence, quantum computing and blockchain seem to be on the eve of breakthroughs, in addition to the development and application of the fifth generation of wireless technology. They will have a big impact on economic growth next year and even directly affect finance and currencies," he said.

The global economy may remain overall stable and is unlikely to enter a new round of recession next year, but a large number of zombie companies have emerged as risks piled up, said Huang Yiping, deputy dean of the National School of Development at Peking University.

"We must think about the risk of forming new channels of financing for zombie companies when we urged the central bank to implement a loose monetary policy," Huang said.

Delivering a keynote speech at the conference, Zhou Xiaochuan, vice-chairman of the Boao Forum for Asia and former governor of the People's Bank of China, said China should strike a balance between service sector development and national security in each subsector of the service industry.

"We should think about to which extent we need to support development of the service sector and to which extent we need to take national security into consideration. It's difficult to draw a line with definite standards," he said.

Certain subsectors of China's service industry are not yet open to private and foreign investment or are limited in terms of investment scope for private or foreign investors, which may lead to capital outflows, he said.

Last year, the service sector accounted for 52.2 percent of China's GDP, according to the Ministry of Commerce.

"The percentage is relatively low compared with the figures of many other countries, suggesting that the Chinese service sector still has a large room for growth," said Zhou.

Many experts estimated that the number could increase to 60 percent or even more.

"Accelerating service sector development is an important part of the current economic restructuring and transition in China and a major direction for our efforts to deal with downward economic pressure," he said. "It is also a vital aspect of shoring up weak links of the Chinese economy."

Besides, China ought to eliminate discrimination towards the service sector, a remaining problem for a planned economy in the past, and reduce over-regulation of prices, he said.