On March 4, 2025, the 246th session of the Macro-Finance Salon, jointly hosted by the International Monetary Fund (IMF) Resident Representative Office in China, the School of Finance at Renmin University of China, and the National Academy of Financial Research at Renmin University of China, and organized by the International Monetary Institute of Renmin University of China was successfully held in Beijing. The theme of the session was "Global Medium-Term Economic Development Trends," focusing on key drivers of global medium-term economic growth and China's role.

Steven Barnett, Former Senior Resident Representative of the IMF Resident Representative Office in China, and Marshall Mills, Senior Resident Representative of the IMF Resident Representative Office in China, delivered keynote speeches. Attendees and participants included Wei Benhua, Former Deputy Administrator, the State Administration of Foreign Exchange of China, Former IMF Executive Director for China; Qi Jianming, Secretary-General of the Asian Financial Cooperation Association; Zhao Xijun, Co-Dean of the China Capital Market Research Institute, Renmin University of China; Ben Shenglin, Dean of Zhejiang University International Business School, President of Beijing Frontier Institute of Regulation and Supervision Technology, Co-Director of the International Monetary Institute of Renmin University of China; and Qian Zongxin, Deputy Dean of School of Finance, Renmin University of China, Deputy Dean of National Academy of Financial Research, Renmin University of China. The salon was hosted by Zhang Zhixiang, Former Director-General of the International Department of the People's Bank of China and Former Executive Director for China at the IMF.

Firstly, I want to thank Steven and Marshall for allowing us to talk about productivity from both a China's perspective and the global perspective. You both talked about efficiency, and I also think the reforms behind efficiency are crucial. And you look at labor, capital, and how to manage resources more effectively. I hope Steven you should learn from Mr. Zhang, who retired 23 years ago but still keeps working. The labor participation in China is a miracle. That's why it's hard to fully account for how many people being working.

I will talk about three points.

First, the key drivers of the global medium-term economic growth outlook. I will use four "T"s.

First and foremost is technology. Many of you have talked about AI and other advancements. I'm from Hangzhou, Zhejiang－the home of DeepSeek, which is founded by one of our alumni. Technology is probably the most important factor, though I won't elaborate due to time.

The second "T" is trade. Somehow globalization has become almost a dirty word. I was studying in the United States for my PhD, we all learned from Europe and America about how multilateral trade agreements would help the global economy. Now, this framework faces challenges － Canada, Mexico, and China have been getting additional tariff from the US as of this week. Fortunately, China has a large domestic market, but for smaller open economies, they are more exposed in many ways . The European Union, for example, is suffering additional impacts.

The third "T" is trust. Given geopolitical tensions, people question whether we trust markets, multilateralism, globalization, or institutional arrangements. Without trust, I mean, in the fields of technology and AI, people won't invest long-term. Chinese students anxious about their careers prospect won't spend money. Restoring trust in the global system will take years. More importantly, that’s probably the total factor productivity—how labor, capital, and technology are organized. If there is a lack of social trust, it would be a big challenge.

The final "T" is Trump. We can see that he wants to reform in many ways, he wants to reform the global order, to reform the way things are done, which means uncertainty, probably a little unpredictable. This makes things a little bit tricky when you are trying to invest for a long term project or when you're planning many things.

These are the four key drivers of medium-term economic growth.

My second point: Steven and Marshall mentioned the "miracle of China." Some attribute this to a strong government or state-controlled economy, but we must be cautious. Over the past 40 years, reforms have reduced the government's role, that's the reason why China has been growing fast. Today, we need another phase of reform and opening-up—That means we need to rebalance, probably reduce the role of government, similar with Elon Musk's advocacy for a "Department of Government Efficiency". If you look at China as a country, what are the most innovative, vibrant economies in China? It's Zhejiang. It's Shenzhen. That's where the government are playing less active or direct roles. They are less visible in terms of interventions.

I think we need to be careful when people say that the Chinese government is the most effective government. Because many people in northern China or in certain parts of China would disagree, where the government can be too direct, strong and interventionist, so that they are not efficient at all. In Chinese, we call “effective government and efficient market”, these two are the things which are very difficult to balance. And I don't know whether the United States has more government already. Because even the U.S. struggles with government size—its public institutions are shrinking. At the global level. The multilateralism won't work without some institutional support infrastructure, like IMF, WTO and so on. So that's why I think the government won't be able to do many things without some public institutions to support in terms of coordination, cooperation, monitoring the market behavior and so on.

This is the second point I want to say, that China and the rest of world are learning that the role of government is not as powerful as we thought, if it takes too direct or too aggressive approach, it will backfire.

Finally, despite the trade uncertainty and many other things, Chinese economy is globalizing.  If you look at some of the private firms in Zhejiang, they are going global and they are going everywhere, either they choose to do that or are forced to do that because of the global supply chain. But the fact is that Chinese economy needs to be global, and after 40 years of growth, we need to contribute to the global community in many ways as well. Just like the US and Europe’s investment in China, FDI has helped Chinese as well. So that means when we look at the global medium term economic growth outlook, we need to think about not just GDP. I'm not sure whether GDP will be the most relevant and important thing for China as Chinese economy are going global. Take Japan for example, Toyota has some largest facilities in the United States, but it's not counted as Japan's GDP.

In closing I want to say that China has been a good student of the United States, good student of Japan, good student of European Union. We have learned and copied best practice to Chinese market. It's easier to be a student as you are just following, but it's going to be a lot more challenging to be the real leader. Advanced economies are entering the phase of what we call the intangible economy. It's less about the bridges, especially in the OECD countries, where I think the most investment are not for the so called hard assets, the most investment are going to the so called intangible economy—the technology, innovations, patents, branding and so forth. That's not what Chinese are good at. We need to learn. How can we do it? Of course, DeepSeek has helped. Ne Zha, a broadcaster Chinese movie recently, that helps. But culture and ecosystem that will help foster the innovation is critical, including the policy, including the role of government as well. Like Steven, I'm optimistic, but I see a lot of challenges. A lot of challenges as China goes global in many ways and we don’t know how to handle them. To be a student is easy, but to be an original innovator and inventor is a lot more difficult. And that's why I hope that the younger generation will do a better job than we do. At least for Chinese.

Thank you!