China needs to respond to external challenges with stability

As the world's second-largest economy, China's economic development is closely related to the global political and economic landscape. This is also an eternal topic of discussion in the financial industry. What external challenges will China's economic development face in 2025? How to deal with it

At the 2024 New Finance Conference held in Beijing on the Southern Weekend, former Vice Minister of Finance Zhu Guangyao was invited to deliver a keynote speech on "Global Economic Situation and China's Reform and Opening up". He believes that looking ahead to 2025, China's economic development will face five prominent external challenges: the Trump administration's second inauguration in the White House, global climate change challenges, progress in implementing the United Nations Sustainable Development Goals, artificial intelligence governance arrangements, and geopolitical conflicts. To cope with the complex and severe international situation mentioned above, China needs to be targeted and respond to external challenges with stability

Zhu Guangyao has long been committed to working in the global economic and financial fields. Since the establishment of the China US Strategic Economic Dialogue, he has participated in the preparation and implementation of various dialogues and has been widely recognized for his contributions and influence in the global economic and financial fields

Former Vice Minister of Finance Zhu Guangyao delivered a speech at the 2024 New Finance Conference

China's influence on the world is constantly increasing

Zhu Guangyao said that China's influence on the world is constantly increasing, and the contribution of China's economy to the global economy will continue to remain at around 30%.. Coincidentally, Foreign Ministry spokesperson Mao Ning also publicly stated at a regular press conference in August 2024 that China's economic growth rate has been among the top among major economies for many years, contributing around 30% to world economic growth and becoming a major trading partner for more than 140 countries and regions. In 2024, the Chinese economy continued its overall stable and progressive development trend

The above statement undoubtedly anchors the position and development trend of the Chinese economy in the global economic landscape. In response to this, the International Monetary Fund (IMF) stated in its "World Economic Outlook" released in July 2024 that China's economic growth rate in 2024 will be 5%. This value is 0.4 percentage points higher than the organization's April forecast

The IMF has raised its growth forecast for emerging markets and developing economies due to the strengthening of economic activity in Asia, particularly in China and India. Among them, benefiting from the rebound in domestic consumption and strong export performance in the first quarter, China's economic growth rate has been raised to 5%. However, due to the resistance brought by aging population and slowing growth rate, it is expected that China's GDP will slow down to 4.5% by 2025

The IMF is a global financial institution consisting of 189 member countries. Supervising the economic policies of member countries, providing policy recommendations, collecting and publishing global economic and financial data, and providing information to policymakers, researchers, and the public are important responsibilities of the IMF

Five major challenges

Zhu Guangyao also believes that the complexity, severity, and uncertainty of China's external environment for development are rapidly increasing.. He believes that the external challenges that China's economic development will face mainly manifest in five aspects

Firstly, the potential impact of Trump's second visit to the White House in the United States. Zhu Guangyao said that Trump repeatedly emphasized during the campaign and after his victory that he would impose tariffs of 10% -20% on US trading partners and 60% on China. This tariff threat is a serious challenge to the international multilateral trading system centered around the World Trade Organization. Zhu Guangyao mentioned that looking back at the 1920s, the high tariffs imposed by the United States led to a global trade war. In the early 1930s, the global economy fell into recession, ultimately leading to the 'Great Depression'. He believes that tariff wars, trade wars, and technology wars go against the historical trend and economic laws, and there are no winners

Secondly, there is a risk of regression in the global response to climate change. This risk also stems from Trump's statement during the campaign to withdraw from the Paris Agreement again. Trump announced his withdrawal from the Paris Agreement during his first term in office, in June 2017. This has led to a serious setback in global efforts to address the climate change crisis

Zhu Guangyao introduced that in November 2024, the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change held a meeting in Azerbaijan and reached an important consensus: developed countries have an inescapable historical responsibility for the current situation of climate change. Before 2035, official and private capital from developed countries are required to provide $300 billion annually in support to developing countries in addressing climate change. Trump's return to power may lead to another announcement of withdrawal from the Paris Agreement. This will once again set back the global efforts and progress in addressing climate change

The third challenge is that the implementation process of the United Nations Sustainable Development Goals has not been satisfactory. In 2025, the implementation of the United Nations Sustainable Development Goals will enter a critical period. It has been 10 years since the United Nations set 17 goals in 2015. Looking back at the core content of these goals, a series of objectives such as poverty reduction, hunger prevention, clean water, environment, and economic development are very unsatisfactory. The most prominent is that the goal of preventing hunger is far from being achieved. So far, nearly 800 million people still live in hunger. In 2025, if this process cannot be advanced, social unrest in some countries will impact the entire order of international peace and development

The fourth challenge is related to governance arrangements and ethical systems triggered by the rapid development of artificial intelligence. In 2024, artificial intelligence will experience explosive development, creating very favorable conditions for improving human productivity. But at the same time, due to the inherent thinking of general artificial intelligence, a new production relationship has emerged. However, the international community is far from adapting to the changes in productivity and production relations to form international rules for governance, especially ethical norms. This is a challenge for all of humanity

Finally, there is the challenge of geopolitics. At present, the turmoil in the Middle East is still ongoing, Ukraine is still embroiled in military conflicts, and South Korea has also experienced political turmoil recently. These geopolitical developments require analysis and response. How to deal with the uncertainty of these significant external environments is a major challenge

Concentrate on doing your own thing

How to deal with the above challenges?

Zhu Guangyao believes that in the face of the above challenges, China should respond to external challenges with stability. Focus on adopting the following three measures. One is to strengthen the tracking and analysis of members of the Trump team and their key policy proposals, laying the foundation for targeted contingency plans. We must be prepared to fight against the strong anti China sentiment of the new Trump administration. The most crucial mission in negotiations with the United States is to safeguard national rights and dignity, and steadfastly defend national sovereignty, security, and development interests

The second is to focus on doing one's own thing well, concentrate on promoting development, and accelerate development to enhance the ability to play against the United States. The tariff war, trade war, and technology war ultimately boils down to the competition of productivity between countries, as well as the competition of funds, technology, and talent. Development is the fundamental principle, and maintaining healthy and sustainable economic growth is crucial

Thirdly, we should handle China US relations in accordance with the three principles of mutual respect, peaceful coexistence, and win-win cooperation. Adhere to high-level opening-up, align with international standards in terms of rules, regulations, management, and standards, further expand high-level opening-up, including independent and unilateral opening-up, and implement the requirements of the 2024 Central Economic Work Conference into action