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China isn't the only one facing a "new normal", according to the head of China's sovereign wealth fund, who tips a period of weak growth, divergence and instability for the global economy.
"China says its economy has entered a 'new normal'. I think the same can be applied to the world economy," Ding Xuedong, chairman and CEO of China Investment Corporation, the world's fourth-largest sovereign wealth fund, told CNBC on the sidelines of the annual World Economic Forum in Davos, Switzerland.
"Weak growth refers to the weak momentum we have in global economic recovery. Divergence is about the widening differences in economic performance and policies around the world," he said. "[And] instability refers to geopolitical events, such as the conflicts between Russia and Ukraine, as well as terrorists attacks and environmental disasters that happen quite frequently these days. "
Economic forecasters have been paring back expectations for global growth in 2015, reflecting multiple headwinds.
Earlier this month, the World Bank lowered its global growth forecast to 3 percent from the 3.4 percent forecast made in June, warning that the world economy is overly dependent on the single engine of the U.S. recovery.
China's new normal
The characteristics of the world's "new normal" differ from that of China.
In China, the term refers to a period of slower but healthier growth amid a reorientation away from export and investment-led growth model towards domestic-consumption-driven growth.
Discussing his outlook for the world's second largest economy, Ding says China has the ability to maintain growth in the range of 7-7.5 percent this year.
The economy grew 7.4 percent in 2014, down from 7.7 in the previous year, the slowest pace in 24 years.
"It will not be driven by aggressive government stimulus programs, but [by the] market," he said, citing the government's decision to introduce measures to simplify the administrative and approval procedures for businesses and open up more sectors to private enterprises.
However, that's not to say the government will not use infrastructure investments as a means for boosting economic activity.
"It is likely that the government will make infrastructure investments in the [Western parts of China], where they face shortfall of roads and railways. These investments are necessary and will benefit the economy," he said.
Thumbs up for ECB
Ding applauded the European Central Bank's (ECB) decision last week to embark on an unprecedented quantitative easing (QE) program.
"It will help Europe's economic recovery and prevent disinflation in an era when the U.S. is exiting its own QE programs and normalizing interest rates. I think the ECB should get credit for making this decision."
The ECB on Thursday announced a full scale bond buying program, pledging to buy 60 billion euros ($70 billion) worth of private and public bonds each month until at least September 2016.