China's President Xi Jinping says emerging markets are 'main engine' of growth as services sector surprises

 
Jasper Jolly
CHINA-DIPLOMACY-BRICS
Chinese President Xi Jinping (right) met Indian Prime Minister Narendra Modi (left) at the summit (Source: Getty)

Chinese President Xi Jinping today described emerging economies as the “main engine of global growth”, as economic indicators portrayed an economy making strong progress ahead of a crucial Communist party congress next month.

Xi told fellow world leaders that emerging markets must “jointly seize the historical opportunity arising from the adjustment of world economic structure”, according to the state-run China News Service, in a speech which also implicitly criticised the protectionist turn of the US under President Donald Trump.

“Some countries have become more inward-looking, and their desire to participate in global development cooperation has decreased,” said Xi in an earlier speech, according to Reuters.

Russian President Vladimir Putin and Indian Prime Minister Narendra Modi were among the heads of state present to hear Xi describe the rise of emerging markets as “an irreversible trend of our times”.

He was speaking on the final day of the Dialogue of Emerging Market and Developing Countries, a summit in Xiamen bringing together the heads of state of so-called Brics countries along with other leaders of emerging markets.

Read more: IMF upgrades China growth forecast again but warns more reforms are needed

Xi’s remarks came as a closely watched indicator showed China’s services sector grew significantly faster than expected in August, continuing a recent run of positive economic news.

The Caixin services purchasing managers’ index rose from 51.5 in July to 52.7, well above the 50 reading indicating an expansion in the sector and also beating consensus expectations by almost a point.

Chris Scicluna, an economist at Daiwa Capital Markets, said: “This suggests that China may well have maintained some of the unexpected strong growth momentum recorded in the second quarter.”

Growth reached an annual rate of 6.9 per cent in the second half of 2017, surprising analysts who had predicted a gradual managed slowdown in the world’s second-largest economy.

The signs of a strong economy will deliver a boost to Xi ahead of the 19th Communist party congress on 18 October, at which the world’s second largest economy will decide its broad economic policy direction for the next five years – including whether to act to restrict a massive build-up of credit.

China watchers will also be following the appointment of a new politburo closely to determine how many loyalists Xi can install in top positions.

Read more: IMF: China credit boom could lead to "crisis" without decisive action

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