At the press conference held on the 6th at the Great Hall of the People, Ma Kai, Director of the National Development and Reform Commission, Minister of Finance Xie Xuren, and Governor of the People's Bank of China Zhou Xiaochuan addressed the growing influence of the global economy on China’s economic landscape. The discussion highlighted the increasing interconnectedness of economies in an era of deepening globalization.
Ma Kai emphasized that as economic globalization progresses and international industries shift or adjust, no country can remain isolated. He pointed out that China's economic ties with the rest of the world are becoming increasingly close, resulting in a more significant impact from the global economy on China’s domestic situation. "The world economy now has a greater influence on our own," he said, underscoring the need for vigilance and adaptability.
The topic of trade surpluses also came up, with Ma Kai noting that in the context of globalization, one country’s surplus often corresponds to another’s deficit, which may represent a long-term, global challenge. This dynamic requires careful management and international cooperation.
When asked about the impact of U.S. interest rate cuts on China, Governor Zhou Xiaochuan acknowledged that while there is room for China to raise interest rates, such decisions must be made carefully. "Interest rates are an economic lever, and using them involves both advantages and disadvantages. The timing and scale of adjustments require a delicate balance," he explained. He also noted that while U.S. rate cuts affect China’s policy, domestic factors play a crucial role in shaping the final decision.
Zhou Xiaochuan also addressed the ongoing U.S. subprime mortgage crisis, stating that a real bottom has not yet been reached and that its effects should not be underestimated. While Chinese financial institutions have some exposure to subprime debt, the losses are relatively small and manageable due to the size and stability of these institutions. However, he warned of potential indirect impacts through changes in global trade and economic conditions, which could ripple through the global system and eventually affect China.
He further highlighted the growing interdependence of global interest rate policies, noting that what happens in one major economy increasingly affects others. This makes it essential for China to monitor global developments closely. Additionally, U.S. efforts to counter a potential recession—such as loosening monetary policy or providing fiscal support—could exacerbate global liquidity issues, which in turn could influence China’s monetary strategy.
In conclusion, Zhou stressed that under the current globalized environment, many economic influences are beyond previous experience and analysis. Therefore, continuous attention and flexible policymaking are necessary to navigate this complex and evolving landscape.
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