Opening Remarks by Angel Gurría, OECD Secretary-General, delivered at the The 2013 Party School-OECD Development Forum
Beijing, China, 23 March 2013
(As prepared for delivery)
Vice-President, Ladies and Gentlemen:
It is a great pleasure to be here again, after three years, to inaugurate the first Central Party School-OECD Development Forum, together with my friend Vice-President Zhang Boli. I would like to extend my sincere gratitude to Vice President Zhang for supporting this important project.
The Central Party School-OECD Development Forum provides a platform for an informal exchange of views on how to jointly address global challenges. The Forum also provides an opportunity for future Chinese policy-makers, the OECD Secretariat and representatives of Member and Partner countries to put their minds together, to learn from each other, and to identify best practices and new solutions.
In this new multipolar and interdependent world, the best ideas blossom in a space of inclusive diversity. This is what this Forum is about. To kick off our discussions, let me share with you some of the OECD perspectives on the economic outlook and some of the main economic challenges our countries are facing.
The Global Economic Outlook
How do we see the global economy moving forward? Well, the good news is that the outlook is indeed looking considerably better than when we met three years ago. The fear of catastrophe has receded. The so-called “tail risks” have subsided. OECD debt ratios are high but should soon stop rising. In the US, recent numbers from the jobs market, the housing sector and investment in R&D are cause for some optimism. In Europe, action has been taken to stabilise the sovereign debt market, although more needs to be done to put in place a well functioning banking union. In Japan, there are now prospects of the economy emerging from deflation.
This is definitely good news. However, we should remain cautiously optimistic. We are not out of the woods yet. Most of the major OECD economies are still facing multiple challenges of weakened public finances, low growth and high unemployment, especially among the youth.
Fortunately, the global economy is still benefiting from the acceleration of the recovery in emerging and developing economies, which are now growing at an average close to 5%. Many of these countries have made important macroeconomic, financial and social progress, but most are still facing important structural challenges like: poverty, inequality, low productivity, weak legal frameworks, corruption, low participation in value added chains and low levels of interconnectivity.
In this context, we see China’s economic growth regaining strength and its exports growing, despite weak demand in Europe. Some rebalancing of demand is already occurring, as a tighter labour market boosts real wages and reduces profits. At the same time, the improvement of the social security system has reduced the need for households to save. Indeed, in 2013, it seems that social spending, relative to GDP, will be at a similar level to several OECD countries.
This is very welcome news, but there is definitely no room for complacency. To develop China’s enormous potential to its fullest capacity, further reforms are needed to raise productivity and living standards. A number of possible reforms are presented in the 3rd OECD Economic Survey of China, developed in cooperation with the State Information Centre, which I launched yesterday with Vice-Minister Yang Weimin. I look forward to discussing some of these recommendations with you today.
It's time to Build a Partnership for a Stronger, Cleaner and Fairer Growth
We need to work together to promote a stronger global growth - one that promotes more and better jobs. Deep and wide-ranging supply-side reforms are needed, and the OECD pointed forward precise country-by-country proposals at the most recent meetings of the G20. Countries have already made ambitious commitments and adopted the Framework for Strong, Sustainable and Balanced Growth to set out their proposals. The OECD is playing a pivotal role in this process. Now is indeed the time to deliver on the promises!
We need to work together to promote a cleaner type of growth. I’m talking about green growth. The OECD has been at the forefront of efforts to help set green growth firmly in the minds of policymakers and to find new drivers of growth at this time of weak recovery. We firmly believe that by appropriately addressing the sustainability of natural assets in public policies, economic growth and development can be advanced in a way that enhances productivity, fosters innovation, creates jobs and opens new markets. At the same time, the risks of calamitous environmental consequences can be reduced.
We also need to work together to fight protectionism and promote more innovative and inclusive approaches to international trade and investment. China, as well as many other emerging and developing countries, has benefitted from increased global exchanges. But we see deterioration in the collective trade and investment policy stance. There has been an accumulation of new restrictions and a failure to remove existing ones. If unchecked, such a process will slow medium-term growth.
The OECD has developed an innovative approach to measuring trade in value added terms, an approach that emphasises the role of Global Value Chains. This work has changed our understanding of international trade flows and has the potential to give a new impetus to currently deadlocked multilateral trade discussions.
And we need to work together to foster investment in infrastructure in developing countries. Infrastructure needs will be colossal in the next decades and will represent about 2 per cent of global GDP annually. Let’s harness all available sources for financing such investment. This requires, for emerging-market economies, to develop their domestic long-term bond markets and create the conditions that favour long-term investments.
China does not lack infrastructure investment. The efforts of the China Development Bank to mobilise long-term funds for domestic infrastructure investment have no parallel in the world. Together with the China EXIM Bank, it has also recently started financing infrastructure around the world. Elsewhere, these financing needs have to be met by long-term institutional investors. All asset managers, pension funds, insurance companies and sovereign wealth funds will need to be involved. And we will present innovative proposals this afternoon. Let us seize this opportunity to boost and green infrastructure investment.
As we leave the crisis behind, we need to work together to create a stronger, cleaner and fairer global economy. But the only way we can achieve this is through effective and inclusive multilateral cooperation. The G20 definitely provides a relevant framework for this, as the only forum where global economic heavyweights from both the developed and the emerging world discuss policies on an equal footing.
The OECD has been an active contributor to this process, supporting its work on a wide range of areas. Not just covering structural reforms, trade, investment and development; but also green growth, food security, disaster risk management, taxation, labour, financial inclusion and the fight against corruption.
As the world’s second largest economy, China can make a significant contribution to address these global challenges. China is one of the best performers in the G20 and a source of innovative policy practices. Most importantly, perhaps, China is a main driver of global economic growth. Just like Germany, it is likely to remain a world manufacturing hub but, by orienting investment to innovation, it can move up the quality chain. Thus, it can maintain its position as one of the fastest growing economies in the world. But it has to act on the social front as well, to make its growth more inclusive. This would help to boost consumption and domestic demand, and in turn to achieve strong, sustained and balanced global growth.
Ladies and Gentlemen:
The crisis has had enormous economic and social costs, but it has also been rich in lessons; it has provided wisdom and taught us humility. One of the strongest lessons of this crisis is that a globalised economy with weak global governance is a recipe for imbalances and instability. Like never before we know that local wellbeing is a function of global progress. And that the only way to raise our living standards and protect future generations is through inclusive and effective international partnerships, like the one we are fostering here today.
The OECD and China are building a new partnership based on growing collaboration in key policy areas: from social inclusion to urbanisation; from education to green growth; from energy efficiency to corporate governance and taxes. This Forum adds an important milestone to this fruitful collaboration. There is a lot we can learn from each other to help countries design and implement better policies for better lives.