Global market distortions require joint solutions: expert
Distortions in the global market are caused by many factors and to blame China's excess industrial capacity for that is biased, an expert said on Sunday.
"Problems in the global market need joint efforts to address them and China is stepping up efforts to cut overcapacity in many domestic sectors such as steel and textiles," Xie Shuiqing, an associate professor at Chongqing Jiaotong University, told the Global Times on Sunday.
Xie's comments came after US Treasury Secretary Jack Lew spoke to students at Tsinghua University in Beijing Sunday, saying that the global markets are seeing distortions due to China's excess industrial capacity.
World economies are also responsible for the sluggish global market and some Western countries have long pursued protectionism against China, which curbs China's exports and to some extent led to the overcapacity of some Chinese industries, Xie noted.
"Domestic low-end product sectors did report excess capacity because China had plentiful cheap labor in the past, but now the country is trying to produce and export high-end products to beef up its competitive ability, including machine tools and construction equipment," he said, noting that the country will continue to open its markets to the world.
Lew said that he believes China and the US can make progress in opening China's financial and healthcare sectors.
China would see "very bad consequences" for its economy and bilateral US relations if it backs away from its stated goals to open its markets and rebalance its economy toward consumer-led growth, Lew was quoted as saying by Reuters on Friday.
Since China's consumption level remains still low, the government is expected to further boost consumer spending via promoting purchasing power and enhancing personal income, the expert said.
Lew also said China's recent currency intervention had not been problematic, noting that it would be "problematic" if China's yuan only depreciates over time.
Xie said that "as China is now in a phase of economic adjustment, there is some room for the yuan's decline in the short term. But as the country's economy has growth potential, the yuan won't remain weak in the long term."
