China has faced many growth transitions as imbalances arose during the phases of reforms, and China has changed the growth model successively to address them, while keeping growth high. However, China’s latest imbalance has persisted since the global financial crisis and is taking longer to address. Internal imbalances arising from credit-and debt-financed investment have overtaken external imbalances from the current account. As a result, since the global financial crisis, as fiscal stimulus rose, and stayed high, and corporate debt doubled, capital efficiency has steadily fallen, with total factor productivity significantly declining and reducing its contribution to overall growth. This reflected China’s rising investment since the crisis being concentrated in less productive sectors such as real estate, and implemented by state-owned enterprises (SOEs) that built excessive capacity in sectors, such as coal, cement and steel. These tensions and imbalances all centre on China’s financial system, that has become large, and opaque, with a proliferation of financial products, and need to be addressed for other structural reforms to take hold, and to sufficiently nurture investment and innovation in globally surging services sectors. In an important step toward this end, China’s top leadership has recently signaled that it would tighten steps to address financial stability risks by establishing a new Financial Stability and Development Committee under the State Council. How China meets the challenge its growth model now faces is critical for global growth and, equally for China, that also faces the rising reality of changing demographics?
About the Speaker:
Anoop Singh is currently adjunct Professor at Georgetown University, Washington DC and Director, Financial Markets, Centennial Group International, Washington DC. He is also Distinguished Fellow of Geoeconomic Studies at Gateway House, India and on the Academic Committee at Renmin University, Beijing. Before that, he was Managing Director and Head of Regulatory Affairs, Asia Pacific, for JP Morgan (2014-2015); and, at the International Monetary Fund, he was Director of the Asia and Pacific Department (2008-13), Director of the Western Hemisphere Department (2002-08), and Director of Special Operations. His additional work experiences include: Special Advisor to the Governor of the Reserve Bank of India (RBI). Mr. Singh has worked and written on macroeconomic, surveillance, and crisis management issues, helping design programs in emerging market, transition, and developing countries in South and South-East Asia, Eastern Europe, and Latin America. He led IMF missions to many ASEAN countries, to Vietnam, Bulgaria, and Albania during their early transition experiences, and to a number of other countries in Asia and in the Americas, including India, Australia, China, Japan, and Argentina. He has many publications to his name
The Talk focussed on the Growth Transitions As Imbalances Arose During The Phases Of reforms, and Chinas response to that.
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