The EU commissioner on Economic and Monetary affairs said, during a visit in Beijing on September 19, that the global imbalance of the world economy is the most important challenge facing both China and the EU; and China's efforts to address its internal challenges would help.
In his speech at Tsinghua University on Tuesday afternoon，Mr. Alumina remarked that China and the EU, as "major global actors," shared some similar domestic and global challenges: the environment and climate change, the needs of better functioning economies, the aging population, and the regional disparity in growth and income.
The most important challenge in terms of the macro-economy, he declared at the press conference after the speech, is the imbalance in the global economy. It is caused by the large deficits in current accounts and budget in the US, combined with a large surplus in the current accounts of emerging countries – China and other emerging Asian economies – and oil producers.
He believed that China's current efforts on boosting internal demand and putting the environment and regional equality on its priorities list would contribute to a balance in the world economy. An increase in domestic consumption would reduce the savings rate so that the economy would depend less on exports and investment. In addition, a social security network would help boost consumption and narrow the growing gap. He said the EU would help China develop a social security system and make cooperative dialogues on this issue.
China's efforts on re-balancing its own growth, he asserted, would contribute to re-balancing the global economy; and reduce the pressure on China's "external side of the economy," and the revaluation of its RMB.
However, he recognized that China and the EU have not found a way to tackle the imbalance in the world economy in a "cooperative and rational way."
On the EU side, Mr. Almunia was convinced that a "proactive approach" would be better than a protectionist stance. The EU should contribute by progressing with the Lisbon agenda – an ambitious program created by EU leaders in 2000 to make the EU's knowledge-based economy the most competitive and dynamic in the world; through macro-policies, by maintaining a stable currency and prices, a more balanced fiscal policy in member states; and providing stability to the global economy and the global financial market.
Although the EU has no sub-prime mortgage market, Mr. Almunia was concerned about three possible consequences of turmoil in the world financial market caused by a sub-prime mortgage crisis in the US. A slowdown in the US economy will affect the EU. However, he did not think the US was experiencing a recession. Tightening credit, which has become a reality, would possibly "stay on the market for a while." It is still difficult to assess how much impact there would be on investors and consumers.
By People's Daily Online
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