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China growth slowdown and the global implications

On November 25th, ICCJ held a seminar and luncheon on the possible impacts - for Europe and for the rest of the world - of the ongoing economic and financial developments in China, which have recently come to the forefront of the international policy debate.
Guest speakers at the seminar were Mr. Angelo Cicogna, Head of Bank of Italy Representative Office in Tokyo, and Mr. Akio Takahara, Professor of Contemporary Chinese Politics at the University of Tokyo Graduate School of Law and Politics.

Mr. Cicogna stated that “the slow down we are going through now is not a shock but rather the continuation of a trend. What we are facing is not a crisis of the economic system; it is an adjustment process which has implications not only for China but also for its counterparts.” He continued by explaining that policy makers around the world are very much supportive of China authorities' efforts to rebalance their economy in order for its expansion to become more sustainable, by relying more on consumption and on the services sector, after a prolonged phase of rapid growth of exports and fixed investments.
He also gave insight on graphs describing China’s role in the world economy: “if we look at China’s GDP in the last ten years, we can observe that for example, in 2004, China’s GDP growth rate was about 10.1%, and its contribution to the world’s GDP growth was about 0.9%. In 2014, China’s GDP growth was reduced to about 7.3%, but its contribution to the world’s GDP was increased to about 1.2%. This shows how much the global role of Chinese economy has increased over the past few decades.”

Mr Cicogna’s conclusion is that “while China’s slowdown is likely to continue in the short run, this should not represent an impediment for the longer term development of the global economy; according to the International Monetary Fund the Country is expected to have a growth of 6.3% in 2020 and still contribute significantly to the world growth that is expected to reach 4.0% in that same year.”
Recently the reforms agenda of China’s authorities is focused on creating a more durable and solid footing for the longer-term growth performance. This means on the demand side, the increase of domestic consumption, and on the supply size, the increase of the share of services. 
The implications for the partners are the birth of new opportunities, not just challenges: for example, Japan has recorded a slowdown in the export of goods to China but has significantly increased the export of services, especially those related to tourism. China can also become an increasingly important partner for medium – high end consumer goods producers, such as Italy.
After the overview by Mr. Cicogna, professor Akio Takahara focused on China’s external policy as a window, providing a perspective on what’s happening in Japan.
He underlined that, while the Japanese position has not changed during the years, Japanese-Chinese relations became friendlier since last year. As a result, an important dialogue was established with Japan. There are many reasons to justify this change: from the economic point of view, Chinese leaders realized the importance of Japanese investments and technological transfer for the flourishing and dynamism of their economy. It was finally clear for Chinese leaders that political relations affected economic exchange.
He also mentioned the “One Belt, One Road” Initiative proposed by China and the Trans-Pacific Partnership (TPP) agreement to better understand the economic impacts and geopolitical influences.
The conclusion of Prof. Akio Takahara about the possible effects of China’s economic slowdown on its politics and diplomacy, is that “not only external observers but also Chinese themselves say that there are two possibilities: there is the possibility of China to further develop relations with neighbours, for instance understanding the importance of Japanese contribution; on the other hand, the second possibility is that depending on how much the economic downtown will be in the future and as a consequence the instability in China society, then Xi Jinxing can be tempted to go back to the previous position towards Japan and whip up nationalism again to unite the parties and the Nation”.

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