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China's think tank sees key trends shaping future of global economy

Source: Xinhua Updated: 2020-09-24

BEIJING -- With shifts in the makeup of global economic landscape becoming evident, the Development Research Center of the State Council, a Chinese think tank, outlined key trends that are to shape the future of the global economy during the next five years:

-- The COVID-19 pandemic accelerates reshaping of the global economic landscape.

The global spread of COVID-19 over the last few months brought economic activity to a sudden halt and sent the global economy into a deep recession.

Terming the pandemic as the biggest uncertainty weighing on global social and economic development, the think tank warned that the short-term fallout may have a lasting impact due to shrinking manufacturing supply chains, while COVID-19 worsens global financial vulnerability and raises risks of a liquidity trap with interest rates at or below zero in the long term.

The think tank called the COVID-19 epidemic a "stress test" for China's economic system, forcing decision-making concerning technological sectors, business investment and industrial policies to be more targeted in the post-epidemic period.

It expected the country to speed up reform and opening up, boost the "dual circulation" development pattern that allows domestic and overseas markets to reinforce each other, and improve the quality and efficiency of development during the 14th Five-year Plan period (2021-2025).

-- Digitalization becomes a critical force in international competition.

Digitalization is reshaping production patterns, product forms, business models, industrial organizations as well as the international landscape, and will become a major force to foster economic and social transformation in the next five years.

The center projected that development in new generation information technology (IT) would revolutionize traditional production relations and superstructure. IT is also expected to reinvent traditional industries to give them a competitive edge, while a digital currency would become a new battlefield of global competition.

-- Shifting boundaries help reshape global economic structure.

As boundaries between traditional technologies, factors, global competition and industries shift after the outbreak of COVID-19, clashes between such boundaries would intensify and catalyze restructuring of the global economy. The think tank forecast the rise of trade protectionism, populism, exclusivism and deglobalization.

The think tank expected that countries and businesses will diversify supply chains and put economic security high on their agenda, which may lead to increasing disputes and restrictions on cross-border flow of commodities, technologies, data and personnel.

Part of multilateral cooperation mechanisms may head for the doldrums, while regional and bilateral investment and trade arrangements would become more critical.

-- Changing balance of major powers fosters new landscape of global economic governance.

The rise of developing countries and emerging economies is reshaping the global economic landscape and international division of labor, speeding up the development of a new global economic balance of power.

The center said the reshaping of a new global economic and social landscape is accelerating, with the global governance framework of security, economy and trade that developed after World War II being seriously challenged by the U.S. withdrawal from various international organizations.

-- Undersupply of global public goods is a prominent issue.

The center pointed out that the pandemic has made the scarcity of global public goods a more prominent issue than ever before, and underscored the role of a nation's capacity in handling such a global public health crisis.

It expected the government's role to be further highlighted in the post-pandemic era.

The views don't necessarily reflect those of Qiushi Journal.