TIANJIN, China: Britain’s vote to leave the European Union has added new uncertainties to the global economy at a time when downward pressures on China are mounting, Premier Li Keqiang said on Monday at a World Economic Forum meeting.
Excess capacity, sluggish investment and waning demand weigh on the world’s number two economy, Li said at the annual “new champions” meeting in Tianjin, a port city in northern China.
Last week’s British vote had already had an impact on international financial markets, Li, said, “adding new uncertainties to the world.”
“Due to the severe and complicated international environment and long-accumulated, deep-rooted domestic problems, the foundation of a stable Chinese economy is not solid,” Li went on.
“There remain rather enormous downward pressures on the economy and the difficulties cannot be underestimated.”
But he also sought to reassure the audience, saying that China’s recognition of the difficulties showed it had the “resolution” and “capabilities” to overcome them.
China’s economy, a pillar of global trade, will not have a hard landing, he predicted.
The meeting, a Davos-like gathering of 2,000 elite business and political leaders from over 80 countries, was ostensibly focused on topics related to science and technology but the surprise Brexit vote overshadowed other topics.
A panel Sunday devoted to Brexit showed some soul-searching among the high-powered attendees, with World Economic Forum head of foundations Adrian Monck saying “we’ve not been good” at doing things to help ordinary people.
Panelist Ian Bremmer, president of the Eurasia Group, added: “There’s no question that elites in every manifestation have watched the social fabric fall apart in those advanced industrial economies and not responded to it.”
The British vote was “rational behavior” for people who felt that globalization has failed them and that “the system is broken.”
But not all were sympathetic, as Bremmer later wrote on Twitter that the most frequent Brexit reaction at the China forum was: “Look what happens when you let the mob rule through a vote.”
Economist Nouriel Roubini, known for predicting the US real estate crash, said that Brexit could be “the beginning of the disintegration of the European Union,” but added he did not expect a financial crisis or global recession.
Beijing wishes to see the European Union remain united and stable, Li said, and hopes for a “stable and prosperous” Britain.
Chinese analysts quoted in the country’s state-run media were less sanguine. Zhang Shengjun, an international politics professor at Beijing Normal University told the Global Times newspaper: “China should learn from the Brexit referendum, in which the 4 percent winning margin negated the choice of 16 million people.
“Western democracy might appear reasonable, but it’s actually ridiculous.”