Xi says bigger China role in global economy benefits neighbours

30 Mar6:53 AM

[BOAO] President Xi Jinping pressed his case with Asian neighbours and international business leaders that they stand to gain from China asserting its growing economic influence in the region and beyond.

In a speech on Saturday at the annual Boao Forum on the southern island of Hainan, Mr Xi said that even with economic growth slowing, China can still offer Asian nations trade and investment opportunities. He touted the US$40 billion Silk Road Economic Belt and the Asian Infrastructure Investment Bank - programs that may bolster China's own economy, which posted the slowest growth in more than two decades last year.

The Silk Road targets growth in countries along the historic trading route linking China and Europe, which may create demand for Chinese goods. The AIIB is aimed at financing construction in Asia, potentially bolstering business for China's road, train and bridge builders.

"Facing the fast-changing regional and international situation, we must see the whole picture, follow the trends of our times and build a regional order that is more beneficial to Asia and the world," Mr Xi said.

The Silk Road initiative has attracted interest from more than 60 countries and international organizations, Mr Xi said. China plans to improve its investment environment and welcomes all nations to join the initiative, Xi told his audience, which included government officials from Malaysia, Australia and Kazakhstan.

"If I was the prime minister of Kazakhstan, I'd be pretty excited," Jim O'Neill, former chairman of Goldman Sachs Asset Management, said in an interview with Bloomberg Television on the sidelines of the forum. For China, the program "gives a lot of hope and focus to the western areas."

The government will support yuan-denominated bond sales in China by countries, companies and financial institutions along the Silk Road, the official Xinhua News Agency reported Saturday. China will also urge domestic financial institutions and companies to sell bonds overseas and spend the proceeds in countries in the region, as well as help expand currency swaps and settlements between these nations, Xinhua said.

"China's economy shouldn't be viewed only by its growth rate," Mr Xi said in his speech. "China's economy entering the new normal will continue to provide countries including Asian nations more markets, growth, investment and cooperation opportunities."

The "new normal" phrase referenced in Mr Xi's speech and by central bank governor Zhou Xiaochuan the following day describes economic expansion driven by domestic consumption rather than exports and infrastructure spending. The government is targeting growth of about 7 per cent this year, the lowest in more than 15 years.

There is still room for monetary policy action to boost an economy that has slowed a "a bit too sharply," Mr Zhou said in a Sunday speech before the Boao conference concluded. He called for vigilance against the possibility of deflation.

Mr Xi's address came shortly after the finance ministry issued a statement saying that the Asian Infrastructure Investment Bank now had 30 founding members, including the UK, Switzerland, India and the Philippines. So far, the US and Japan are the only Group of Seven holdouts to the initiative.

Russian President Vladimir Putin has approved his nation joining the AIIB, First Deputy Prime Minister Igor Shuvalov said at Boao following Xi's address. Australia is finalizing the process to sign a memorandum of understanding committing the country to the AIIB, according to a cabinet statement on Sunday.

"We're joining because it is right for Australia," Treasurer Joe Hockey told Channel Ten television the same day. "It's right for Australia to be part of a multilateral bank that is going to be providing tens of billions of dollars in loans in our region, to our neighbors." During the conference, Mr Xi met delegates from Indonesia's President Joko Widodo to Fortescue Metals Group. Chairman Andrew Forrest and Microsoft Corp. founder Bill Gates.

Mr Xi met billionaire Gates on Saturday to discuss poverty reduction and public health services, Xinhua reported. China will take an active part in the United Nations development agenda and is ready to work with the international community on lowering poverty, the news agency cited the president as saying.

Mr Gates, the world's richest person, and Tesla Motors chairman Elon Musk were among delegates from the finance, business and corporate worlds attending the 15th edition of the Boao Forum, which has its permanent base on Hainan.

The Chinese president also said his nation needs a peaceful environment - both domestically and overseas - to prosper.

"Any instability or war wouldn't be in accord with the basic interests of Chinese people," Mr Xi said. "China will unshakably stick to independent and autonomous peaceful diplomatic policies, and stick to the peaceful development road."

BLOOMBERG