Yearender: Closer China-Europe ties to inspire confidence amid global economic uncertainties

Source: Xinhua| 2019-12-18 13:51:56|Editor: Xiaoxia
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by Xinhua writers Yan Feng, Zhu Sheng

BERLIN, Dec. 18 (Xinhua) -- As the end of the year 2019 approaches, the global economy continues its trend to slow down.

The assessment of the current situation as well as expectations among economic experts had "declined significantly," according to a quarterly released world economic survey by German research institute Ifo.

In Europe, major economies including Germany, France, Britain and Italy have all somewhat felt the headwinds of rising trade protectionism and economic nationalism.

At a time when uncertainties rise, analysts worldwide are calling for a closer China-Europe relationship to create more positive factors in the global political-economic landscape and inspire confidence in the world's future.


The European Commission said earlier that euro area gross domestic product (GDP) is forecast to expand by 1.1 percent in 2019 and by 1.2 percent in 2020 and 2021.

Compared with its projections in July, the growth forecast has been downgraded by 0.1 percentage point for 2019 and 0.2 for 2020.

The European economy is now in its seventh consecutive year of expansion, but the bloc now "looks to be heading towards a protracted period of more subdued growth and muted inflation," the commission said in a statement.

As Europe's growth engine, Germany is expecting a GDP growth of only 0.5 percent for 2019 and 1 percent for 2020. Last year, the country's economy had grown by 1.5 percent.

The U.S.-initiated trade conflicts are hampering global trade and investment activities, said Timo Wollmershaeuser, head of forecasts at the Ifo.

"This is hitting German industry particularly hard, as it specializes in intermediate and capital goods. The automotive sector, one of the key industries in Germany, is also facing particular challenges," he said.

Besides, analysts believe the resilience demonstrated from France's economic growth is mainly driven by domestic demand, as growth forecasts for most of the country's economic partners are revised downwards amid protectionist pressures and Brexit uncertainties.

Tim Moore, economics associate director at global information provider IHS Markit, said that November's Purchasing Managers' Index surveys "collectively suggest that the UK economy is staggering through the final quarter of 2019, with service sector output falling back into decline after a brief period of stabilization."

In Italy, the GDP is only expected to increase by 0.2 percent in real terms in 2019, compared with 0.9 percent in 2018, according to the Italian National Institute of Statistics.

"I think we'll see a substantial effect for specific sectors, like parmesan cheese, which is being taxed by the United States," Luca Poma, a professor of Industrial Economics and Politics at the University of Ferrara, told Xinhua in an interview. "There is also a risk that over time the impacts will accumulate."


According to Javier Noriega, chief economist with investment bankers Hildebrandt and Ferrar, no corner of the global economy can escape the trade turmoil sparked by the United States.

Stephen Perry, chairman of Britain's 48 Group Club, said that the world now knows the consequences of Washington's moves in attempts to eliminate its trade deficit.

"Eliminating trade deficits is not a viable strategy on its own," Perry said, adding that such moves by Washington have weighed on the world economy.

The German Council of Economic Experts, which recently presented their annual report, said that the "weak economic momentum" is expected to persist "into next year at least."

An escalation of international trade conflicts would hit the export-oriented German economy especially hard, it added.

Mao Xuxin, principal economist at London-based economic think-tank the National Institute of Economic and Social Research, told Xinhua in a recent interview that trade tariffs already imposed would cut world GDP growth rate by around 0.2 point, compared to a baseline scenario without such tariffs, and Britain's economic growth rate would fall by 0.06 point.

The slowdown in economic activities has triggered a series of political responses from central banks in developed and emerging economies, Mao said.

"Within the emerging world, the People's Bank of China lowered the required reserve ratio in steps and the Reserve Bank of India injected stimulus into the economy with reductions in its benchmark policy rate. Following on from that, the European Central Bank and the Federal Reserve signaled a delay in policy tightening," he said.


Amid rising trade protectionism, and a multitude of events that may further drag down global growth, China and Europe should join forces and work even closer together, analysts suggested.

From a wider perspective, the swirling trade issues might be good news for the economic relations between Europe and China, both of which have repeatedly expressed their support for free trade, Noriega said.

Europe and China could turn toward each other to avoid the trade tariffs imposed by the United States, he said.

According to Perry, the world economy is "on a knife-edge and China has been 30 percent of world growth. Growth is vital to the West. China's growth is vital to the West."

It is time to build a new world based on cooperation and sharing, a message sent by the new developing world, he said.

"We need more sharing of the benefits. We do not need the U.S. to rebuild old walls. We need new ways of cooperating," he said.

Michael Schumann, chairman of the German Federal Association for Economic Development and Foreign Trade, said that the economic relationship between Germany and China is mutually beneficial.

More and more German and Chinese companies are interested in investing in each other's country, Schumann said, adding that there is a stable foundation for German-Chinese cooperation.

Trust is the basis for strengthening cooperation between Germany and China, he said. "Now it is especially important to improve the understanding of China in German society."

Former French Prime Minister Jean-Pierre Raffarin has told Xinhua that China contributes to the renewal of multilateralism in a world troubled by a strong resurgence of unilateralism, and France also involves itself in the necessary diplomatic work.

"Nations today are so interdependent," and cooperation is "a daily obligation" between consumers and suppliers, partners and competitors, Raffarin said.

He said China's diplomacy is "inspired by a conviction deeply rooted in the Chinese culture" -- one has more to gain from cooperation than confrontation.

There is a need to solidify European-Chinese friendship, he said. "To work toward this friendship is to work for peace."

(Xinhua reporters Zhai Wei, Wang Zichen and Tian Dongdong in Brussels, Liu Fang in Paris, Yang Xiaojing in London, Ye Xinke and Eric J. Lyman in Rome, and Shen Zhonghao in Frankfurt also contributed to the story.)