PRESS RELEASE
G20 Talk ‘Growth’ But Don’t Create It Like China and India
July 24, 2016 (EIRNS)—The Group of 20 Finance Ministers meeting just ended in Chengdu, China adopted resolutions which definitely reflects China’s definition of priority going into the meeting: restoring growth by investment. But only China and India, among major economic powers, seem to be doing that, and U.S. Treasury Secretary Jack Lew—while happy to urge other nations to push greater economic growth—said the Obama Administration considered U.S. growth to be sufficiently satisfactory that no policies need be changed.
Going into the meeting, China’s Trade Minister and its Finance Minister Lu Juwei had stated that the global economy’s condition is "grim," and that coordinated action was needed from the G20 to increase investment in both new infrastructure and consumption.
The G20 communique reflected this assessment:
"We are taking actions to foster confidence and support growth. In light of recent developments, we reiterate our determination to use all policy tools—monetary, fiscal and structural—individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth. Monetary policy will continue to support economic activity and ensure price stability, consistent with central banks’ mandates, but monetary policy alone cannot lead to balanced growth. We emphasize that our fiscal strategies are equally important to support our common growth objectives. We are using fiscal policy flexibly and making tax policy and public expenditure more growth-friendly, including by prioritizing high-quality investment.... Furthermore, we will continue to explore policy options, tailored to country circumstances, that the G20 countries may undertake as necessary to support growth and respond to potential risks including balance sheet vulnerability. We reiterate that excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability."
China is continuing to create large volumes of combined public and private credit issuance (estimated at $240 billion in June alone) for investments both within China, across the Silk Road Economic Belt and Maritime Silk Road, and in Africa, the Mideast and South America. And its overall GDP growth is again slowly rising, at a 6.7% annual rate. Otherwise only India and Korea among major economic powers are actually carrying out new programs of credit for growth. Now all the others are talking about it (particularly Japan and the United Kingdom), but doing nothing as yet.
Regarding the U.S. economy, the Atlanta Federal Reserve Bank is estimating that GDP growth in the first half of 2016 will be at annual rate of just 1.5%, after 2.2% in 2015. Manufacturing output is lower than the year before for 11 straight months; industrial production is below the previous year for 18 straight months.
