China's pragmatic cooperation with neighbors has helped maintain regional stability and common development

From the 1950s to late 1980s, the economies of Japan, the Republic of Korea (ROK), Taiwan, Hong Kong, Singapore, Thailand, Malaysia and Indonesia realized such remarkable growth it became known as the "miracle of East Asia".

At the beginning of the 1990s, the drastic changes in Eastern Europe and the disintegration of the Soviet Union marked the end of the Cold War. The United States and other Western countries pressed the Japanese yen to appreciate sharply, which ultimately led to the collapse of Japan's economic bubble. The so-called Flying Geese Pattern, in which the less developed nations in the region were viewed as being aligned successively behind the advanced industrial economy of Japan, collapsed quickly and profound changes took place in Asia's political and economic landscape.

In 1997, US hedge funds took advantage of the problems in the economic development of Southeast Asian countries and speculated in the foreign exchange market, forcing the Thai Baht and other Southeast Asian currencies to depreciate sharply, leading to a massive flight of capital and bankrupting numerous banks and other financial institutions. A financial crisis broke out all over Asia, resulting in a serious economic recession, huge unemployment, social upheavals and frequent changes of regime. Western countries just sat on the sidelines during this crisis, or they imposed harsh conditions on their economic assistance and encouraged so-called democratic reform. This didn't help Asia overcome the financial crisis, instead, it led to more political, economic and social turmoil.

China's economy was also hit by the Asian financial crisis and its exports fell. Yet as a responsible country, China resisted the pressure to devalue the renminbi and maintained stable economic growth by expanding domestic demand. It supported and actively participated in the regional economic and financial cooperation of East Asia, playing a big part in the joint efforts of East Asian countries to meet the financial crisis and resume economic growth, and helped lay down the foundation for deepening regional cooperation and rebuilding prosperity in East Asia.

During this time, China accelerated its reform and opening-up and the growth of its socialist market economy, which injected sustained vigor into the Asian economy. Asian economies shifted the focus of their business cooperation and investment towards China. A new model of the regional division of labor and cooperation gradually took shape as China became an important engine driving economic growth in Asia.

In 2008, the international financial crisis triggered by the sub-prime crisis in the United States led to serious economic recession in developed countries. The economic growth and export-oriented development mode of East Asia suffered a big shock. Developed countries were preoccupied with their own affairs and unable to extend a helping hand to Asian countries. They even tried to export the crisis by tolerating currency depreciation and injecting massive liquidity. Confronted by shrinking exports and an economic downturn, China decisively implemented proactive fiscal and monetary policies, promptly launched a stimulus package and worked hard to expand domestic demand and imports.

China was among the first countries to recover from the crisis. The Chinese economy grew by 9.2 percent in 2009 and 10.3 percent in 2010, giving a strong boost to economic recovery in Asia and indeed the entire world, and once again played the important role of "stabilizer" for the Asian economy.

The Chinese economy has maintained stable and relatively fast growth since the beginning of this year, growing by 9.6 percent in the first six months. In response to the problems of excessive price increases, especially real estate prices, the Chinese government has made stabilizing prices the primary task of macro control. It seeks to strike a balance between maintaining stable and relatively fast economic growth, adjusting the economic structure and managing inflation expectations. It has taken a series of measures to promote the healthy development of the housing market, to make more targeted, flexible and forward-looking macro-economic policies, adjusting the intensity, pace and focus of macro control according to the changing situation It is confident in fending off both major economic fluctuations and a "hard landing".

The share of emerging economies, including China, in the world economy will continue to rise. In the 12th Five-Year Plan period (2011-2015), China will speed up the change in its economic growth model, pushing for the strategic adjustment of the economic structure and building a long-term mechanism for expanding domestic demand. It will promote technological innovation and further increase imports to seek a balanced trade growth. A conservative estimate shows that the Chinese economy will maintain at least an 8 percent growth rate per annum during the five-year plan period and China's accumulative imports will be no less than US$12 trillion over the next five years. By then, China will be the largest market in the world and play an even more important role as the engine for global economic growth.

China will continue to actively participate in global economic governance and advance reform of the international economic system. China will support Asia in conducting various forms of regional economic cooperation and continue to push forward East Asian economic integration and regional cooperation under the 10+1 and 10+3 frameworks. It will continuously deepen good-neighborly relations and pragmatic cooperation with its neighboring countries, maintain regional peace and stability and promote common development and prosperity in Asia.

The author is deputy director of Institute of Foreign Economic Policy of National Development and Reform Commission.

(China Daily 07/25/2011 page8)