Czech economist optimistic about world economy, and the Belt and Road Initiative
Print Edition
Czech-American economist Jan Svejnar has been studying economic transformations in various developing countries including China since the 1980s. Economic adviser to Vaclav Havel, the first post-revolution president of the Czech Republic, he mounted his own presidential campaign in 2008.
Svejnar has visited China frequently since 1982. As director of the Center on Global Economic Governance and professor of international and public affairs at Columbia University, he visited Shanghai for a two-day economic forum co-hosted by the center last week.
During his trip, Shanghai Daily asked about his plans to run for president, outlook for world economy, views on Brexit and China’s Belt and Road Initiative.
Q: What is your outlook for Brexit, its short-term and long-term effects on Britain and the European Union?
A: The amazing thing is that British politicians are now stuck in a situation of not knowing where it’s heading. It is such that we don’t know which way the government and parliament is going.
If it is not negotiated, we have to take that into account.
In the short run, there could be further devaluations of the British pound. We will see exports and international trade generally affected negatively, and therefore the rate of growth will be slowing down.
On the European side, there will be a shock as well. Britain is the main trading partner with the EU, and that goes both ways, so some countries in particular will be affected. The economic effect will not be as sizable as that of Britain, because the EU economy is larger and more diverse.
Already some businesses have moved to the continent and there will be some more.
In the long run, Britain will still have the continent as its main trading partner. If it has the trading partner with tariff, with protectionist measures, apparently the amount of trade will be less. Some will be directed toward the United States and Commonwealth countries. It will be compensated in the long run to a significant degree.
Q: Italy just signed a New Silk Road agreement with China, leading to some debates in Europe and the US. Why is that and what’s your outlook of such deals in the long run?
A: There are two main views.
One is that it is good to attract foreign investment to Europe. Growth in European countries is slowing down. As we speak now, Italy is already in recession. One of the deals signed was in the port of Trieste. It was an important port in Europe for many years, and hasn’t done very well these years. It reminds of many of China’s deals with the Port of Athens (Piraeus) a few years back.
The other view is not on the economic effect, but concerns about China’s global ambition, considerations of whether the operating companies are privately or state-owned, and etc. These are the same concerns raised with the Port of Athens, and the economic effects of that port are always showing such as jobs created.
I think this debate is just starting and will go on for many years.
Q: There seems to be conflicting views on the outlook for the global economy. Some economists are bullish about growth in major economies, while others suggest we might hit another crisis. Which one should I believe?
A: There are two parts of this outlook. We have seen a very strong growth of global economy in the last two years.
Brazil came out of recession. China grew at 6.6 percent last year, and expectation for this year is between 6 to 6.5 percent. It’s considerable for an economy of this size. The US grew at 3 percent last year, which is also great for its type of economy. It will be slower this year, expected to be around 2 percent as the benefits of tax cuts wear out, but that is still quite good.
On the other hand, we start seeing slower growth in Europe. Germany is slowing down. Italy is growing at a negative rate. It has never come back to the per capital GDP level in 2007. Some countries never recovered fully from the great crisis in 2008.
The expectation is bad. When expectation is bad, it may cause bad results.
Q: You just finished the economic forum in Beijing, what was it like? What were the hot topics at the forum?
A: It is the fourth year of the forum, with the title “China and the West.” We deliberately schedule it after the National People’s Congress and before the China Development Forum, so that we can bring key academics, policy-makers and business people together in between the two conferences.
We have one public session, but most are closed-door sessions held under Chatham House Rule, so everyone is very open about the issues that concern them. This year, we discussed many issues, new economic policies, access to markets, international trade, cooperation and competition, innovation and technology, etc.
Q: The new Foreign Investment Law is just out, what do you think of it?
A: It is a very important step. We have heard from Chinese policy-makers about further opening up. I think this law is on the right track of that.
Q: What were the main factors for you to run for the Czech Republic’s presidency in 2008? Will you consider running again?
A: At the time, there were many different views on how the country would develop, such as integration with the European Union, and I wanted to bring a broader perspective to the discussions.
It was a big challenge for me because I had no experience in such campaigns. And whether I will run again? Well, never say never, but I’m not actively campaigning now.
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