{
  "title": "China and the Global Economy: Creating New Ingredients for Growth",
  "publication": "IMF News, March 20, 2015",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp032015",
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  "summary": "Speech by Christine Lagarde, Managing Director, International Monetary Fund, Fudan University, Shanghai, March 20, 2015. As Prepared for Delivery.",
  "authors": [
    "Christine Lagarde Managing Director"
  ],
  "publishDate": "2015-03-20",
  "sections": [
    {
      "heading": "Introduction",
      "content": "- Speech by Christine Lagarde, Managing Director, International Monetary Fund, Fudan University, Shanghai, March 20, 2015. As Prepared for Delivery.\n- Framing metaphor: running an economy is akin to brewing an exquisite cup of Chinese tea — requiring impeccable timing and a delicate mix of ingredients.\n- Three topics addressed:\n  - What are the ingredients for global growth?\n  - What are the ingredients for China’s economic growth?\n  - What are the ingredients for your own success?"
    },
    {
      "heading": "Ingredients for global growth",
      "content": "- Current global context and risks:\n  - More than six years after the start of the global financial crisis, the world still faces high debt and high unemployment.\n  - IMF recently cut its global growth forecasts for 2015 and 2016 to 3.5% and 3.7%, respectively.\n  - Significant risks include:\n    - Asynchronous monetary policy (expected U.S. tightening while most other countries ease) that may trigger excessive volatility in global financial markets.\n    - Strengthening U.S. dollar affecting emerging market economies with increased dollar borrowing by banks and companies over the past five years.\n    - Prolonged low growth and low inflation in Japan and the Euro Area, though signs of improvement in Euro Area activity and inflation expectations are emerging.\n- Policy recipe:\n  - Need for a more powerful policy mix centered on greater structural reform in all countries, including China.\n  - Recommended measures:\n    - Ramp up public investment to expand or fix vital infrastructure.\n    - Step up trade liberalization.\n    - Press ahead with reforms in education, health, social safety nets, and labor and product markets.\n    - Unleash the economic potential of women excluded from the labor market.\n  - G-20 growth strategy:\n    - Expected to add more than US$2 trillion to the global economy and create millions of new jobs over the next four years.\n    - Implementation is required on a country-by-country, reform-by-reform basis.\n- Channels linking global conditions and China:\n  - Stronger U.S. growth benefits Chinese exports.\n  - Cheaper oil raises China’s private demand and consumer purchasing power.\n  - Weak demand in other emerging markets and the Euro Area (China’s largest trading partner) is a downside.\n  - China has contributed more than a third of global growth over the past seven years."
    },
    {
      "heading": "Ingredients for China’s economic growth",
      "content": "- Main challenge:\n  - Avoiding the “middle-income trap”; China aims to become a high-income country by 2030.\n  - Premier Li Keqiang: “Systemic, institutional, and structural problems have become ‘tigers in the road’ holding up development.”\n- Growth outlook and rebalancing:\n  - IMF forecasts GDP growth of 6.8 percent in 2015 — about half a percentage point less than last year.\n  - A “new normal” of slower, safer, and more sustainable growth is desirable.\n  - Rebalancing underway:\n    - From investment to consumption.\n    - From manufacturing to services.\n    - From capital-intensive growth to innovation, higher skills, and technology.\n- Policy and reform priorities:\n  - Preserve economic and financial stability to allow safe adjustments (example: credit growth has slowed in the past 12 months).\n  - Advance market-oriented reforms in the Third Plenum blueprint, with emphasis on opening up the service sector.\n    - Remove barriers for private companies in finance, education, health, telecom, and logistics to boost employment, consumption, and living standards.\n    - Shanghai and the Shanghai Pilot Free Trade Zone cited as leading examples of service-sector liberalization and business innovation.\n  - Financial sector modernization:\n    - Liberalized lending rates and more flexible deposit rates.\n    - Encourage private investors to establish small and medium-sized banks and other financial institutions.\n    - Further steps needed: liberalize deposit rates and the exchange rate; remove implicit government guarantees (especially for state-owned enterprises); develop greater tolerance for corporate defaults and bankruptcies.\n  - Overarching principle: allow market forces to work more to deliver safer, higher-quality growth.\n- Sustainability and inclusion:\n  - Environmental challenges:\n    - Air pollution, water pollution, and soil contamination are major challenges and harmful to health and growth.\n    - China is stepping up green policies: cracking down on industrial pollution, innovating in renewable energy, recently raised gasoline taxes, and is considering an environmental protection tax.\n  - Income inequality:\n    - China has lifted more than 600 million people out of poverty over the past three decades.\n    - Disparities persist between rural and urban, coastal and inland, and within cities and rural areas.\n    - IMF studies: excessive income inequality leads to slower and less sustainable growth.\n    - Policies to reduce inequality: strengthen social safety nets; improve access to education, health care, and financial services; employ smart redistributive policies including more progressive taxation.\n  - Gender inequality:\n    - Women account for 45 percent of China’s labor force.\n    - Women make up only 25 percent of people in “positions of responsibility,” according to census figures.\n    - Addressing constraints (particularly in rural areas) will raise growth; IMF studies show greater gender equity leads to higher, more sustainable growth."
    },
    {
      "heading": "Ingredients for your success (targeted to students and future leaders)",
      "content": "- Opportunities and sectors:\n  - Biotech, green technologies, cutting-edge information systems, smartphone apps, film, music, video games, and other creative industries.\n  - Some 80 per cent of the world’s adult population is expected to own a smartphone by 2020 — an opportunity for Chinese firms.\n- Skills and global outlook:\n  - Necessity of travel, foreign languages, overseas studies, and cross-border cooperation in science and product innovation to create products and services for global customers.\n  - Emphasize mutual trust and strong ethical behavior as foundations for sustainable ventures.\n- Attitude toward failure:\n  - Encourage trial and error; perseverance; “Dare to ask where the road is; the road is beneath your feet.”\n- IMF as a career path:\n  - Invitation to consider joining the IMF.\n  - Current Chinese presence at the IMF:\n    - 140 Chinese nationals working at the IMF.\n    - 8 graduates of Fudan University among them.\n    - IMF represents 188 member countries; Deputy Managing Director Min Zhu (a graduate of Fudan University) and Jianhai Lin (Director of the department that supports the IMF Executive Board) cited."
    },
    {
      "heading": "Conclusion and outlook",
      "content": "- China has transformed dramatically over the past three decades and is poised to provide global economic leadership in coming decades.\n- The next generation is framed as “the most important ingredients” for China’s future.\n- Collective call to action: nurture global cooperation and national reforms “day after day” to achieve slower, safer, and more sustainable growth that benefits China and the world.\n- Additional high-net-worth statistic:\n  - China is now home to 190 billionaires and more than two million millionaires, ranking just below the United States in high-net-worth individuals.\n\nChina and the Global Economy: Creating New Ingredients for Growth, by Christine Lagarde, Managing Director, International Monetary Fund, Fudan University, Shanghai, March 20, 2015. As Prepared for Delivery.\n\n---\n\n Content in this bundle\n\n- 032015cpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- People's Republic of China and the IMF\n- Speeches\n- Christine Lagarde\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp032015"
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    "Authors: Christine Lagarde Managing Director",
    "Published: March 20, 2015",
    "Speech by Christine Lagarde, Managing Director, International Monetary Fund, Fudan University, Shanghai, March 20, 2015. As Prepared for Delivery.",
    "Framing metaphor: running an economy is akin to brewing an exquisite cup of Chinese tea — requiring impeccable timing and a delicate mix of ingredients.",
    "Three topics addressed:",
    "Current global context and risks:",
    "Policy recipe:",
    "Channels linking global conditions and China:",
    "Main challenge:",
    "Growth outlook and rebalancing:",
    "Policy and reform priorities:",
    "Sustainability and inclusion:",
    "Opportunities and sectors:",
    "Skills and global outlook:",
    "Attitude toward failure:",
    "IMF as a career path:",
    "China has transformed dramatically over the past three decades and is poised to provide global economic leadership in coming decades.",
    "The next generation is framed as “the most important ingredients” for China’s future.",
    "Collective call to action: nurture global cooperation and national reforms “day after day” to achieve slower, safer, and more sustainable growth that benefits China and the world.",
    "Additional high-net-worth statistic:",
    "[032015cpdf (PDF)](/-/media/websites/imf/imported/external/chinese/np/speeches/2015/032015cpdf.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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