Imf Director Of Asia And Pacific Changyong Rhee On Tariffs, Asian Economies, Monetary Challenges

Despite international objections to a tension started by the US have been escalating and more tariffs have been proposed what is a comment on those unilateral tariffs you know first of all we we believe that you know the any restriction on global trade is a bad thing and you know the trade is very important growth engine so I think.

We hope that you know we fight with the countries we find reasonable.

Solutions through the Mafia tourism and avoid the you know protectionism so having said that but still it’s very unfortunate now that the three tension between.

US and China is escalating if you will have on many speed over impact to many other countries and many other reason especially in Asia where the trade is very important as a source of growth and also many Asian economies has tied cross tie with the US and in China as you mentioned Asia’s economy is highly dependent on trade and how worried should we be about the impact of true tensions on Asian economy to quantify this impact of.

This trade tension is not that easy so our force community port try to capture this impacts through three channels the first channel is pure trade channel the second channel is that it may affect your sentiment about investment and.

Then also it can affect the financial market so altogether we our model shows that the current package of tariffs can deduce the Asia’s growth rate in two years by 0.
In case of China it can reduce the Chinese growth rate by 0.
7 percent but at the same time Chinese China and then add other Asian economies has a room to offset some of this negative impact by stimulus policies so we are assuming that China will use a little more stimulus to offset some of negative impact by 0.
5% of GDP so as a result even though 3 attention itself has.

A open 7 percent negative impact using stimulus if you can offset 0.

5 percent then the net impact of this tension will be 0.

2 percent do you believe China has enough room to handle the current rotations yes actually China has an ample room to mobilize its resources to offset some of the negative impact from three attention such as.

Fiscal stimulus and some minor policy but I want to emphasize that China was has been on the leveraging process which is.

Necessary to sustain the sustainable growth and the financial stability in the medium term so the important thing is that when you actually use stimulus to offset some of the negative impact for it negative impact of three attention it’s very important not to reverse this deleveraging process which is also very important in the medium term for financial stability so what we are recommending is rather than relying on the credit expansion for investment which china has relied on after the global financial.

Crisis in 2008 we think that the China can use stimulus packages but it is better to focus more on the fiscal side rather than the monetary side and if you use the fiscal side is better to use for enhancing the social safety net and provide in most incentive for consumption rather than investment so that it can also contribute to the developing of Chinese economy now.

With the further tightening monetary policy how big a challenge it is for Asian economy this interferes in our good news you know if they have to.

Be they have to be prepared if you look at what’s happening in Asia you know Asian economy is much more resilient compared to the period of the Asian financial crisis in 1997-98 and even after the global financial crisis Asia economy was quite resilient.

But if you look at what happens after February this year the emerging market turbulence in Argentina Turkey is impacting all other emerging economies including the Asia and several Asia’s economies also facing the pressure in exchange rate and growth inflation so if I say that I think Asia is well prepared and the.

Asia’s current situation is much better than a previous.

Period and also / with other emerging market but still the risk is risk you know if the you know we we think that this 3 attention.

And the global financial tightening cycle may not end very soon so we is very hard to politically guess when this 3 attention will end between US and China and also we’re expecting that the Fed will continue to increase its interest rate in the this year as well as the next year for a couple of more times so that.

This you know coming Krause one disappeared very soon so I think even though Asians financial market Asia’s countries.

You know statuses conditions is much better than before but they should not be complacent Asia.

Has been at the forefront of digital revolution what kind of opportunity can this digitalization mean.

To Asia’s future growth China is a good example if you go to Hangzhou and change and people do not use money and many services and the many new industry are coming from digitalization industry so the real issue.

Is whether Asia digitalized a digital sector can be a new source of growth following the manufacturing red growth in Asia so in that sense I we have our.

Study shows many interesting findings one even though there is a lots.

Of heterogeneity compared with peers digitalization Asia is relatively much more progressed so in some sense Asia is a forefront of digitalization and then we see there are many good signs that this disillusion help in to enhance the productivity of the Asian economy IT sector alone currently explained more than so one sort of the economics productivity growth in Asia and then we find that the online trading is quite popular in Asia and the company who.

Has access to online has a much have a higher productivity than compared with the company who doesn’t have any access and then also this de televisiĆ³n can help the transparency of the government and also help to increase the tax revenue.

Which is essential for building social save net and building infrastructure there are many good aspect of the you know the digitalization in asia and the issue is that whether instead of being a consumer of the digitalization well actually asia can develop its own new technology on its own for the digitalization and for that purpose I think we.

Need a better education system many Asians education system like in China we are very good in producing the blue-collar workers by Hardware all distinct right for for the distillation we need a creativity and we need a new technology development and the weather agency education system is good for to it in a long-term sustainable way that will be a key where the distillation can be a new source.

Of growth in Asia I think when you look at now the e-commerce and AI or you know the machine running.

And you know whatever you call even IT sector is and telecommunication in even cashless society this whole new technology really.

Changing the you know the way we do the businesses so so far Asia.

Is known for its hard work we spend lots of time by working perspiration and then you know manufacturing sector shipbuilding car all these things but you know as our wage goes up you cannot just.

Rely on the low-wage manufacturing sector driven growth you need a new industry and then now the digitalization sector t-star sector can actually provide us an opportunity so i think it’s a good sign and actually there are many evidence that asia is leading.

Especially China is actually leading in many areas but whether you can but whether we really have this technology developed by our own nations or whether still we are borrowing this technology from out from West that will decide it in the long run whether it is tell a digital economy can be a new source of growth in Asia or not but there are many good sign but still we have to see it has been 40.

Years since China started to open up and launch economic reforms would have been the biggest achievement and contribution of China’s economy to the Asian region come on I think in the last 40 years you know you can see the 40 years ago how the Beijing looked like and if you look at.

The how the raising in China I look like now you can right so you ask me the contribution very easily like in the last two the case China alone explained the 1/3 of a whole global growth and then.

Also almost 1/2 of the Asian growth after the global.

Financial crisis when the global economy or the Bansi times going down is such high not gross which actually support the global gross and you know moving up the the income levels of the global economy China so this 40 years experience not only how to enhance the China’s Chinese welfare which is very true your lesser people move out of poverty but it also contribute to the stability and growth of the Asia especially and the global economy.

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