How does a slowing Chinese economy contribute to the world?
- By Chen Boyuan
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E-mail China.org.cn, January 23, 2016
China announced its GDP expanded by 6.9 percent in 2015, the lowest growth rate in 25 years. Despite the slowdown, the economy still features an optimized structure and improved quality so it remains a major engine for world economic growth.
Locomotive of the world's economic growth
IMF data shows China has contributed 35 percent of global economic growth in the past five years, a figure expected to stay at 30 percent until 2020. Despite being the second largest economy in the world, China's GDP is only one-fifth that of the United States on a per-capita basis, which allows much growth potential to continuously fuel world economic recovery.
That China's economy is vital to the world is evident from the global attention it receives, said Associated Professor Zhu Andong of Tsinghua University, reflecting the close links that now exist with the world that didn't exist before.
Rising "world market"
Although China's imports and exports fell seven percent year-on-year in 2015, the total trade volume still reached US$3.7 trillion, with an increase in imports of bulk commodities. China is expected to remain the world's largest exporter and the second largest importer. Falling prices of major commodities on the international market had obvious impact, however.
China put forth, in the Proposal for Formulating the 13th Five-Year Plan for National Economic and Social Development (2016-20), policies to allow all couples to have two children, encourage real estate developers to lower housing prices, and scrap outdated restrictive measures. China will also spend more on infrastructure development in the future.
This will continuously consolidate the demographic dividend and market size, apart from expanding demand for international raw materials.
Amid structural optimizing of the Chinese economy, technological and industrial upgrading is accelerating, while consumption expands, all leading to larger demand for imports.
Last year, total retail sales of consumer goods in China reached US$4.6 trillion, in which imported items accounted for some US$160 billion.
Premier Li Keqiang said at last year's Summer Davos conference that China would implement more proactive import policies while encouraging high-quality imports and exports.
Meanwhile, as the world's largest magnet for foreign funds, China used US$126.27 billion in foreign investment last year, up 6.4 percent year on year.
World's center of suppliers
Being the world's largest exporter and a manufacturing center, China exports a wide range of products from clothes to solar panels, meeting international needs. Last year, the growth of China's export outpaced the global average as well as individual major economies.
Chinese exports now feature an ever-optimizing structure in terms of variety. Last year, machinery and electrical exports increased by 1.2 percent year on year, accounting for a slightly larger percentage in the country's total export volume. Made-in-China railway and electric power facilities were welcomed in many countries, including European countries and the United States.
Professor Zhu believes that the China's huge home market and manufacturing capabilities means it stabilizes prices, preventing global inflation while supporting the world's economy to develop soundly.
"Worldwide Investor"
Last year, China's non-financial outbound direct investment reached a historic high of US$118.02 billion in the 13th year of consecutive growth averaging 33.6 percent. Chinese direct foreign investment to transport, electricity, and communication industries totaled US$11.66 billion, up by 80.2 percent, and that in the foreign equipment manufacturing sector reached US$7.04 billion, rising 154.2 percent year on year.
Economic observers say the world economy is undergoing deep self-adjustment in the wake of the international financial crisis; under such circumstances, advancing international cooperation on industrial capacity helps improve the global industrial layout, and optimizes the industrial and supply chains.
Precursor of world economic transformation
The World Bank predicted earlier this month that this year's global economic growth would slightly rise to 2.9 percent from last year's 2.4 percent. Faster growth will rely on sustained momentum of recovery in high-income countries, stabilized prices of bulk commodities, and transformed China's growth mode to one led by consumption and service.
China's industrial structure continued to improve last year. The annual added value for the tertiary industry accounted for 50.5 percent in GDP, up by 2.4 percentage points year on year. Also improved was the structure of demand, with expenditure from consumption contributing 66.4 percent of GDP, up by 15.4 percentage points than one year earlier.
The world economic recovery remains slow because the growth momentum left by last round of sci-tech and industrial revolution is being used up, so more transforming and upgrading is needed. In this sense, the transformation taking place in China now is an example how such an upgrade is necessary and possible.
China's sustainable development reinforces world resolve to escape the shadow of financial crisis. China underscores development and this is the fundamental way out of current difficulties for the entire world.
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