How will China’s economic slowdown affect Singapore and our neighbours in Southeast Asia? We spoke with Dr. Xiao Geng, Vice-President (China) of the Fung Global Institute, about China’s economy and other current questions, on the sidelines of our Future50 public lecture on 31 March 2015. The lecture on “China in Asia: The Past, Future, and Singapore’s Responses” featured views from Dr. Xiao and Professor Wang Gungwu, Chairman, East Asian Institute (EAI). For our summary of the event and Channel NewsAsia’s report, please visit www.future50.sg
Q. How would China’s economic slowdown affect Asia, and more specifically ASEAN?
Dr. Xiao Geng: China actually creates 27 per cent of the global growth, so it is very important for the world and also it is particularly for ASEAN because actually ASEAN countries run a trade surplus with China. So, the slowdown in China affects its neighbours quite a lot.
Q. Should China be worried about USA’s potential interest rate hike?
Dr. Xiao Geng: I think China should be preparing (for) that. But, in fact, it’s not going to be very big, largely because the Chinese interest rate is already much higher than the US interest rate now. And also, the returns on China in terms of investment is actually consistently high. And, also, the economy in China is very different from that in the US. China actually (does not have) much problem with unemployment – it’s more of structural reforms, which affects some of the sectors.
Q. With China becoming an increasingly important financier through its AIIB and Silk Road Fund, how would that shape political dynamics in the region and globally?
Dr. Xiao Geng: This is a very good change. China actually has been supporting all the international organisations like IMF and World Bank, and the new organisations like AIIB, you know, they actually will put some pressure on these existing institutions. Especially on how to improve transparency and standards and especially the experiences China (has) had in the last 35 years , know-how to develop the economy, especially in terms of providing infrastructures and also the relationship between the state and the market – China (has) accumulated a lot of experience that will be very useful for countries like India, Africa, and other developing countries.
