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Managing the slowdown in domestic growth and reducing debt at the same time as liberalizing the economy will be central to China's contribution toward global growth, an economist says.
Head of international macroeconomics at the think-tank Overseas Development Institute, Phyllis Papadavid said the effective management of these issues through appropriate policies should be central to discussions at this month's two sessions.
"Clearly we have been seeing growth decelerate. Although it is a natural part of the development process, it needs to be managed by policymakers as they continue to rotate growth from exports and investment to consumption," Papadavid said.
She also said China needs to reduce its domestic debt levels and allow more foreign investment into the country to better integrate China's economy into the global financial system.
"Every one of these challenges alone is significant and the fact the three are being managed together in a successful way is testament to the policymaking committee's ability. In the past, other emerging economies have found it hard to just liberalize, but China is also broadening its financial system," Papadavid said.
"China's recent measures to allow foreign investors to further invest in its domestic markets are seen as positive, it is important for China to continue to broaden and deepen its financial sector as the country liberalizes."
China announced new guidelines for eliminating hurdles for foreign investment access in many sectors following the State Council's executive meeting in December 2016. Sectors with increased access include energy, water conservation, environmental protection and utilities.
China's 2016 GDP was 6.7 percent, a slowdown compared to its double-digit growth rate prior to the 2008 financial crisis. Papadavid said that despite this growth slowdown, China's economic growth is still creating positive spill-over effects for global trading partners, particularly as it trades with and invests in other emerging economies such as sub-Saharan Africa.
The China-led Belt and Road Initiative is building global connectivity through infrastructure, and the China-led Asian Infrastructure Investment Bank is playing an important role in promoting investment and global growth, Papadavid said.
"It will be interesting to see whether China leads new institutional initiatives in the next few years, to fix other 'global gaps', such as in global governance," she said.
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