China alone cannot save world from Brexit downturn

China’s Premier Li Keqiang (C) speaks during the 1+6 Roundtable meeting on promoting growth in the Chinese and global economies at the Diaoyutai State Guesthouse in Beijing on July 22, 2016. / AFP PHOTO / POOL / Mark Schiefelbein

The world cannot depend on China alone to save it from a Brexit-induced downturn, the country’s premier said Friday. Li Keqiang made the remarks after meeting the heads of six global economic organisations, days after the IMF predicted that uncertainty created by Britain’s vote to leave the European Union would slow the world economy into next year.
“Given the financial fluctuations as a result of Brexit, China will advance market-based reform of its exchange rate,” Li said, adding, “we will not engage in a trade war or currency war.

But “it is impossible to carry all of the burden of the whole world on our shoulders,” he said.
Improving global economic growth would require the world to step up macroeconomic coordination and increase the transparency of macro policies, Li added.
In an update to its April forecast, the IMF said global economic growth was likely to be 3.1 percent this year and 3.4 percent in 2017, a downward revision of 0.1 percent for both years. At the same time it upgraded its growth forecast for China by 0.1 percent to 6.6.
The Asian giant’s economy expanded at 6.7 percent in the April-June period, the same as the first three months of the year and slowing from a growth of 6.9 for the full year 2015 — its weakest annual rate in a quarter of a century.
But the second-quarter reading was stronger than expected and fuelled hopes that growth in the world’s second-largest economy may be stabilising.
Li said the IMF hike put “pressure” on China to “maintain growth and stability,” adding that the organisation should “encourage all countries to move in the same direction”.
Following Li’s comments, World Bank president Jim Yong Kim praised China for its commitment to international economic cooperation at a “time when in the West there is a very loud rejection of globalisation and multilateralism”.
The remarks come as Beijing finds itself in a dispute with the EU over whether or not it deserves to be granted market economy status, a designation that would make it much harder for major economies to fight Beijing over alleged unfair trading practices.
Li’s meeting came ahead of a G-20 finance ministers summit in the Chinese city of Chengdu, where representatives from the biggest industrialised and emerging economies are expected to discuss the impact of Brexit.