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ASIAdocument.write(“” + m[today.getMonth()+1]+ ” “+ today.getDate()+”, ” + theYear + ” “);HOMECHINAWORLDBUSINESSLIFESTYLECULTURETRAVELSPORTSOPINIONREGIONALFORUMNEWSPAPERChina Daily PDFChina Daily E-paperChina Daily Global PDFChina Daily Global E-paperBusiness /ViewEconomyPolicy WatchChina DataCompaniesMarketsIndustriesViewMotoringTechGreen ChinaWith QE at an end, its now time to tackle reformBy Zheng Yangpeng(China Daily)Updated:2014-11-18 16:59Comments Print Mail Large Medium SmallWhether the global economy can “get out of the woods” depends on leaders ability to tackle structural reforms, Mark Weinberger, the global chairman and chief executive officer of the multinational professional service firm Ernst & Young Global Ltd, told China Daily.The US Federal Reserve Board has just ended its long-running bond-buying stimulus program, known as quantitative easing.Witnessing the effect of this process, policymakers in Europe and Japan have followed suit this year, rolling out their own versions of QE to battle the threats of deflation and unemployment. But in Weinbergers view, these programs, mostly monetary policy, “wont fix anything. They just buy you time, provide liquidity for governments and the private sector to ultimately improve”.QE will not create the improvement on its own, he said. “As monetary policy moves off the table, the question for developed countries is, will reform start to happen?”Much time has been wasted as little reform progress has been seen in Europes core nations following the eurozone sovereign debt crisis of 2010-12. In Japan, people wonder when Abenomics “third arrow” of structural reform will be unleashed, following aggressive monetary and fiscal expansion.Weinberger admitted that reform has gotten hard around the world, because “political payback for reform in the short term is negative” even if in the longer term, it is the right thing.For example, politicians who propose to liberalize labor policy are not rewarded by voters. “Yet, without that, you will not see Europe being able to do what the US has been able to do”, he said.But ultimately, he believes that “by necessity”, European leaders have to embrace reform.”In the longer term, Europe will be fine. But they are going to need to get some real political will to be able to deal with these tough issues,” he said.Even in the US, where the economy has responded to QE relatively well, Weinberger said that a real recovery will occur only when structural reforms are undertaken to address the underlying problems.”You have lower energy prices, low interest rates and low inflation (in the US), and you only have annualized GDP growth of 3.5 percent. Thats not that strong,” he said.The underlying problems, according to Weinberger, a former assistant treasury secretary, is that US debt still exceeds $18 trillion and is expected to grow as interest rates go up and imbalances in international payments persist.What also worries him is widening income inequality, a particularly ominous sign for an economy that generates 70 percent of output from consumption.”Until people believe that they are going to have jobs and wage increases, they are not going to go out and spend,” he said.When it comes to China, it is also ultimately about reform. Growth has slowed, but that is not necessarily a bad thing.”To me, it is a typical transitional phase as youre trying to move China from exports and investment to a consumption-led economy. You allow some slowdown as you cut some investment.”A transition to consumption does not happen overnight. There are going to be some bumps in the road,” he said. “Id rather have slightly lower GDP growth for a couple of quarters, making sure the reform moves forward to make a consumption-based economy with higher value-added jobs … the real area we should be looking at, is whether the promised reforms are made,” he said.Despite concern that foreign investment in China decelerated this year, Weinberger said part of that reflected a slowdown in the global economy.His conversations with global CEOs showed him that “everybody wants to invest in China”, given the expanding middle class and entrepreneurship.Related newsUS QE exit to put further pressure on Chinas slowing economyFed announces end to quantitative easing stimulus, keeps low ratesPBOC monetary policy not US-style QEUS QE potential risks on emerging markets8.03KRelated StoriesUS QE exit to put further pressure on Chinas slowing economyFed announces end to quantitative easing stimulus, keeps low ratesPBOC monetary policy not US-style QEUS QE potential risks on emerging marketsPhotoModern food van with ancient look in Shanghai10 major economic policies in 2014Beeper collector brings back the vintage digital ageStudent entrepreneurs in AnhuiOld fashioned tea house seen in AnhuiTop 10 secrets inside Xiaomis marketingChina Economy By NumbersChina Economy by Numbers – Dec China Economy by Numbers – Nov NewsmakerTesla gets new local chief CICC chief steps down from postMost ViewedTodays Top NewsCash crunch fans expectation on RRR cutUS extends antidumping duties on Chinas thermal paperModern food van with ancient look in ShanghaiChina home prices continue to cool in NovemberAsias top 3 billionaires all ChineseOld investment remedy the treatment for Chinas “new normal”Chinas solar sector opposes US anti-dumping rulingBMW to recall 846 cars in ChinaHot TopicsFiat SpA Peugeot SA Taxi app Internet finance Housing price Disneyland 12306.cn WeChatEditors PicksTop 10 secrets inside Xiaomis marketing 10 famous shopping streets in China Top 9 most-livable cities in China Six online travel agencies trapped in price war SpecialsWorld Internet Conferencebauma China 2014What to expect from Alibaba IPO…| About China Daily | Advertise on Site | Contact Us | Job Offer | Expat Employment |Copyright 1995 -var oTime = new Date();
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