Past Event

Will China’s slowdown bring headwinds or opportunities for Europe and Central Asia?

After years of rapid growth, China's GDP is expanding more slowly. There are fears about the global impact, but could there also be opportunities for Europe and Central Asia?

Date: April 29, 2016, 12:30 pm Global Economics & Governance Tags & Topics

Summary

See below for video and materials.

Structural rather than cyclical factors lie at the center of China’s recent growth moderation.  China’s slowdown is a result of both slower expansion of production capacity and rebalancing, which entails a shift from investment to consumption, from low-skilled to high-skilled production, and from FDI to OFDI. Furthermore, China is catching up both in quantitative and qualitative terms. Qualitatively, productivity is catching up by looking at the fact that trade balance remains unchanged and growth continuing to remain at above 7.5%. Quantitatively, income gap is closing resulting from the price effect.

China’s slowdown and rebalancing bring both opportunities and challenges for Europe and Central Asia (ECA). The impact of slowdown would hurt resource exporters in the East, while reducing competition for exporters in the West. Real depreciation and changes in relative prices entail an opportunity for European producers competing with Chinese imports. Structural rebalancing towards consumption and high skilled production will benefit both West and East, the former through increased demand of high-skilled consumption goods and the latter through demand for low-skilled labor. Rebalancing entails a particular opportunity for the EU, which presently is experiencing a weak recovery with declining unemployment and rising export opportunities brought forward by real depreciation vis-à-vis Renminbi.

However, there are further challenges that China’s slowdown entail for ECA. First, China fueled Europe with cheap products which drove down the unit import price. Therefore, China’s declining growth may decrease consumer welfare in the EU. Second, exchange rate advantage might not last, since China could at any moment increase the money supply by easing its monetary policy. Third, unskilled labor industry in the EU might not gain competitive advantage vis-à-vis China anytime soon considering an ample supply of low skilled production that could replace China, especially the South East Asian countries. Europe’s competitive advantage lies in high-skill intensive industries and it is doubtful that China’s slowdown will cure wage inequalities within the EU.

Furthermore, policy challenges need to tackle the issue around excess industrial capacity in certain industries such as steel, and the implications of slowing FDI on the manufacturing sector and trade in general.

Event summary by Uuriintuya Batsaikhan, Research Assistant

VIDEO RECORDING

Event materials

Maurizio Bussolo – presentation

 

Schedule

Apr 29, 2016

12.30 - 13.00

Check-in and lunch

13.00 - 13.30

Presentation

Maurizio Bussolo, Lead Economist for Europe and Central Asia, World Bank

13.30 - 14:30

Comments and Audience Q+A

Chair: André Sapir, Senior Fellow

Jianwei Xu, Visiting Fellow

14:30

End

Speakers

Bussolo pic

Maurizio Bussolo

Lead Economist for Europe and Central Asia, World Bank

André Sapir

André Sapir

Senior Fellow

DSC_0160

Jianwei Xu

Visiting Fellow

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevón

Matilda Sevón

matilda.sevon@bruegel.org +32 2 227 4212

Read about event More on this topic

Past Event

Past Event

Artificial intelligence: challenges and opportunities

Rob Atkinson, the founder and president of the Information Technology and Innovation Foundation presented his research work on the impact of artificial intelligence on our lives.

Speakers: Robert Atkinson, Anna Byhovskaya, Merja Kyllönen and Georgios Petropoulos Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 23, 2017
Read about event More on this topic

Past Event

Past Event

Conversations on the future of Europe

On the occasion of the 60th anniversary of the signing of the Treaty of Rome, we held an event of four conversations between Bruegel scholars and European thinkers.

Speakers: Maria Demertzis, Ivan Krastev, Emmanuel Mourlon-Druol, Johanna Nyman, André Sapir, Catherine Schenk, Andre Wilkens and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 22, 2017
Read article More on this topic More by this author

Opinion

Guntram B. Wolff

Europe should lead the way with multilateralism

Despite the unique partnership with the USA, Europe needs to reflect on its place in an unstable world. Especially if the US Administration moves towards protectionism, the EU will need to build and deepen relationships with other partners.

By: Guntram B. Wolff Topic: Global Economics & Governance Date: March 16, 2017
Read article Download PDF More on this topic More by this author

External Publication

ruble

Collapse of the Ruble zone and its lessons

This essay, published by CESifo, aims to summarise the experiences of the two monetary disintegration episodes, i.e. termination of settlements in TR since 1 January 1991 and the gradual collapse of the Soviet ruble area in 1990–1993.

By: Marek Dabrowski Topic: Global Economics & Governance Date: March 15, 2017
Read about event More on this topic

Past Event

Past Event

Intellectual Property and Competition Policy in Europe and Japan

Intellectual property (IP) is a cornerstone for incentivising innovation initiatives. It defines a framework within which firms and individuals can produce creations of intellect.

Speakers: Peter Alexiadis, Reiko Aoki, Michael Koenig, Kai-Uwe Kühn and Georgios Petropoulos Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 14, 2017
Read article More on this topic More by this author

Blog Post

photo2016

NAFTA in play: How President Trump could reshape trade in North America

How will the story of NAFTA unfold under the Trump presidency? Uri Dadush examines three possible scenarios and provides an overview of the policy implications for the various trading partners of the United States.

By: Uri Dadush Topic: Global Economics & Governance Date: March 1, 2017
Read article More on this topic More by this author

Blog Post

dsc_0809

The Mexican automotive industry and Trump’s USA

Trade with Mexico is a controversial topic for the new US administration. And the automotive sector is emblematic of Trump’s promise to bring manufacturing jobs back to the USA. But a look at the numbers reveals risks in any shake-up of cross-border trade. 22% of US automotive exports to Mexico are later reimported as part of cars “made in Mexico”. And disrupting production chains could have repercussions around the world.

By: Filippo Biondi Topic: Global Economics & Governance Date: February 27, 2017
Read about event More on this topic

Past Event

Past Event

Different perspectives on Nord Stream II

At this event, we bruoght together key-experts that studied the regulatory and economic aspects of Nord Stream II

Speakers: Severin Fischer, Siobhan Hall, Alan Riley, Szymon Polak, Sebastian Sass, Simon Schulte, Borbála Takácsné Tóth and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 21, 2017
Read article More on this topic More by this author

Blog Post

Marek Dabrowski

The EU should not retaliate against Trump’s protectionism

If the US moves ahead with Republican plans to introduce a border adjustment tax, the EU will need to decide on its response. Marek Dabrowski argues that the EU would be unwise to retaliate with its own anti-import policies: the border adjustment tax would be difficult to implement and damaging to the global trade order. Instead the EU should build a broad coalition of allies to defend free trade.

By: Marek Dabrowski Topic: Global Economics & Governance Date: February 9, 2017
Read article More on this topic More by this author

Blog Post

photo2016

The border adjustment tax: a dangerous proposal

Reflecting the fact that the United States imports more than it exports, border adjustment tax is considered by its proponents as an essential part of the Trump tax reform package.

By: Uri Dadush Topic: Global Economics & Governance Date: February 9, 2017
Read about event More on this topic

Past Event

Past Event

Financing the Belt and Road Initiative

The Belt and Road initiative, recently embarked on by China, aims to improve cross-border infrastructure in order to reduce transportation costs across a massive geographical area between China and Europe.

Speakers: Alicia García-Herrero, SUN Mingxi, Jianwei Xu, Alessandro Carano and Sue Anne Tay Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 9, 2017
Read about event

Past Event

Past Event

Brexit and trade: what EU and WTO rules imply

Bruegel in collaboration with Leuven Centre For Global Governance Studies organizes an event at which we will discuss the options for redesigning trade relations in the post-Brexit era.

Speakers: Viktoria Dendrinou, Hosuk Lee-Makiyama, Petros C. Mavroidis, André Sapir and Prof. Jan Wouters Topic: European Macroeconomics & Governance, Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 6, 2017
Load more posts