Have confidence in China

Women work at production lines in a shoe factory in Jinjiang, Fujian province, Nov 3, 2012. [Photo/Xinhua]

 

Macroeconomic policy coordination and cooperation to go on with other countries for strong and sustainable global growth

Recently the world has been keeping a close eye on China's economy, especially after the National Bureau of Statistics released the economic figures for the third quarter in mid-October. Some people have seen positive signs, while others, the danger of a hard landing. Some even claim that China is on the edge of an economic crisis or could fall into the middle income trap. In response to this it is necessary and important to see the true picture.

It's true that China's economy grows in a complex environment. But this situation should be viewed combining both external and internal factors. As to external factors, China's economy, which is deeply integrated in the global village, cannot be decoupled from the global economic fundamentals. This means China's economic slowdown can be partly attributed to the lackluster recovery of the United States, the European Union, Japan and other major developed economies; their insufficient credit and effects of their economic and financial policies; the overflow of global liquidity combined with the competitive devaluation of currencies as the result of those uncapped accommodative monetary policies; and in general the sluggish global demand and economic growth.

As to domestic factors, China's economic slowdown, which is actually moderate, is in line with the national 12th Five-Year Plan (2011-15), and is also a result of the macroeconomic adjustments implemented by the government. It's the policy efforts promoted by the government and their expected results that are worth attention. We have seen the optimization of the primary, secondary and tertiary industries, and some outdated production capacity has been rapidly upgraded. The current economic fundamentals are sending more and more positive signals. The profits of industrial enterprises became positive in September after being negative for five months; power output has grown from -1.73 percent to 2.75 percent; the year-on-year increase in exports has rebounded to 9.9 percent; the consumer price index has fallen to 1.9 percent; rural and urban employment in the first three quarters was 114 percent of the target for the year; and the purchasing managers' index has returned to above the economic boom line of 50 percent. All these statistics demonstrate that China's economy is rebounding and should improve in the fourth quarter and through the whole of next year.

A fair assessment of China's economy can only be made taking a historical and long-term perspective rather than judging it on temporary fluctuating figures. In the future, China will continue to accelerate its process of industrialization, urbanization, informatization and internationalization. Its development will not only benefit the eastern coastal areas, but also the underdeveloped middle and western areas as well, lifting millions of people out of poverty to well-being and common prosperity. China, already the world's biggest industrial base, will also become the biggest consumer market in the near future. Professor Justin Lin, former chief economist of the World Bank Group, said he believed that the moderate or high growth rate of China's economy could be sustained for 20 years.

The facts and figures indicate that there is still great room for China's further growth. With its own efforts, China has won its place in, and become an indispensable part of, the global supply, industrial and value chain. Labor costs in China may have been rising, but they are still far behind those of the advanced economies. Moreover, higher wages for Chinese workers can help stimulate domestic demand. Recently China has replaced the US as the largest destination for foreign capital, proving that China still remains popular among international investors.

Jim Rogers, the American investment tycoon, once said that the 21st century will be the Asian century, with China being the most important country in Asia, and the figures show the truth of his words. Today, more than 470 enterprises out of the Fortune 500 operate in China. With the increasing share of their global sales and profits coming from China, transnational companies have prioritized China as a place of strategic importance. A Bloomberg survey in May showed that global investors have confidence in China and 51 percent of them believe in the helmsmanship of the Chinese government. The March report of the American Chamber of Commerce in China stated that 76 percent of those interviewed believed they would materialize better returns this year than in 2011, and 58 percent of them regarded China as one of the top three destinations for investment. The sales of General Motors in China have surpassed those in the US, and the number of Japanese corporations operating in China has more than doubled over the past decade.

China is not merely celebrating its own development, it is also contributing to the common development of the world. As one of the largest engines of global economic growth and a major pillar of international trade, China has established interdependent and win-win economic ties with other nations. China has become the most important trading partner of 78 countries and regions, whose gross domestic product accounts for more than 70 percent of the world's total. US farmers, Japanese car manufacturers, Thai fruit producers and dealers of European luxury brands all consider consumers in China the most important. Figures from the Organization of Economic Cooperation and Development indicate that in the past two decades, every 1 percent of GDP growth in China has resulted in 0.3 percent growth in low-income countries in Sub-Saharan Africa. China has firmly committed itself to globalization by supporting free trade and resisting all forms of trade and investment protectionism and China will spare no efforts to push forward the international development agenda and safeguard the interests of developing countries. This indicates the important role China is playing in keeping economic globalization on track and maintaining the stability of the global economy.

The world's growth needs China. China's development also needs the world. In this regard, it is of key importance for China to have a peaceful, stable, open and inclusive international environment. Unfortunately, since the onset of global financial crisis, there has been an increasing inward inclination in some countries with the introduction of more and more crisis-transferring actions. Investment and trade protectionism against emerging economies is rising. These shortsighted actions by some countries not only hamper the world economy, but also hurt their own recovery and benefit no one. With the impact of the global financial crisis still being felt and the downside risks to the global economy growing, it needs all countries to make joint efforts to overcome the difficulties.

China will honor its own commitments to continue its opening-up strategy for win-win results. It will also enhance its macroeconomic policy coordination and cooperation with other countries for strong, sustainable and balanced world economic growth.

We have every reason to be confident in China's future economic outlook.

The article is also published in today's People's Daily in Chinese.