Wang Qishan’s confidence is one thing, success in US trade talks another
- Optimistic Davos address by China’s vice-president told of growth and “modest prosperity”, but it is to be hoped that his outlook is not tested and truce with Washington turns into peace
In the wake of the lowest quarterly mainland growth figures for decades and a warning to top cadres from President Xi Jinping against risks to China’s stability, many were apprehensive about what to expect when one of Xi’s most trusted aides addressed the World Economic Forum at Davos, Switzerland.
Vice-President Wang Qishan surprised global political and business elites with optimism that China’s growth remains on track to deliver “modest prosperity” for all Chinese people by next year. Indeed 6.6 per cent growth – still the envy of the country’s main trading partners – was a significant number, he said, and “not low at all”.
Wang set a different tone to US Secretary of State Mike Pompeo, who hours earlier had warned the Davos audience of the threat of “China’s state-centred economic model”.
China’s leaders have good reason to send out an upbeat message, having launched their broad-based strategy for keeping the economy on course amid the US trade war and slowing growth, which includes more lending for companies and local infrastructure, and tax cuts.
Wang said that instead of breakneck expansion, China would pursue sustainable growth by refining its economic structure, quality of growth and efficiency. “With 6.6 per cent growth, we can reach our target of delivering modest prosperity for all Chinese people by 2020,” he said. At the same time, it was necessary to prepare for a “worst-case scenario” such as a new global economic crisis.
Xi Jinping’s talk to senior cadres of the need for vigilance against “black swan”, or unforeseen events, and “grey rhinos”, ignored threats, echoed warnings spread a year ago by former central bank governor Zhou Xiaochuan, and others, about potential threats to economic stability such as excessive debt.
But coming from Xi on the heels of a lower GDP figure it had shock value in terms of perceptions of China’s growth. However, urging preparedness does not mean a worst-case scenario or systemically threatening event is coming. Rather it reflects a “bottom line” approach to the need for prudence.
Contrary to some people‘s impressions, Wang’s remarks did not necessarily contradict Xi’s warning. He was saying that with measures in place to stabilise the economy, 6.6 per cent growth in an economy the size of China’s was very solid and reason for confidence.
Confidence needs to be more than a facade, with vice-premier and chief trade negotiator Liu He due in Washington next week for more talks to try to turn the current trade war truce into peace.
Such confidence implies that if China loses its market position in the United States – a grim scenario – it can survive by achieving its goal of sustainable growth in a huge domestic market. That might be the assessment of top state and private sector leaders, but they would prefer, no doubt, that talks succeed and it is not put to the test.
