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FACTDROP: An objective understanding of China’s development
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1/04/2013

An objective understanding of China’s development




Πηγή: Coc
By Zheng Xiwen (Peoples Daily)
Jan 4 2013

The National Intelligence Council of the United States (NIC) has recently released the report “Global Trends 2030: Possible World,” forecasting that China’s total economic output (GDP) will surpass the United States by 2030 and become the world’s largest economic entity. The report also said that it will be difficult for Chinese economy to maintain the average annual growth rate between 8 and 10 percent like in the past 30 years, and will face the risks of political instability, rising nationalism and “middle-income trap.”

It is the first U.S. official forecast saying that China may catch up to it in the future, which caused great attention of the international media.

The release of the report and its contents might encourage the wrong views including “China responsibility theory,” “China collapse theory” and “China threat theory.” Therefore, it is necessary to make a clarification and let the world know a true China.

China is still the world’s largest developing country

Although China has become one of the world’s major economies, it still has the characteristics and properties of developing countries such as large population, weak economic foundation and unbalanced development.

The situation that China has a low per capita share of energy resources is difficult to be changed fundamentally. With the further increase in economic aggregate and continuous growth of population in the next period, China will face greater pressures in supply of energy resources and carrying capacity of environment.

The situation that China has a low per capita income is difficult to be changed quickly. According to the data published by the International Monetary Fund (IMF), China’s per capita GDP was about 5,400 U.S. dollars in 2011, ranking 89th in the world, a level of middle-income countries. The imbalance of economic development will be more prominent in the future.

The situation that China has a low per capita share of social resources is difficult to be changed significantly. Although China has initially built the world’s largest network of social security, it is still in the lower level, with public expenditures in education, medical treatment and public health even lower than general developing countries. It will take quite a long time to reach the world’s average level.

Therefore, even if China’s GDP exceeds the United States, it is still the world’s largest developing country. The international community should have a full and rational knowledge about the phenomenon. Any views stressing one side but ignoring the other side are one-sided and wrong.

China will still be the best place for the world to invest

The “2012 World Investment Report” of the United Nations Conference on Trade and Development (OECD) named China as the most popular host country in the eyes of multinational companies. China has confidence and conditions to remain the most attractive to international investors. It will attach great importance to and properly deal with the “middle-income trap.” However, the view that China will fall into the “middle-income trap” is unfounded and irresponsible. The reasons are as follows:

First, China will further promote the cause of Reform and Opening up. 2012 is the 20th anniversary of the speeches by Deng Xiaoping, the chief designer of China’s Reform and Opening up. Not long ago, General Secretary Xi Jinping had an inspection tour in Guangdong and Shenzhen, sending a strong signal that China will continue to push forward the process of the Reform and Opening up, which is also good news for international investors.

Second, China will further accelerate the release of domestic demand. In 2011, China’s final consumption expenditure was about 22 trillion yuan, equivalent to one-thirds of that of the United States, so it still has huge upside potential. Since China’s per capita GDP reached 5,400 U.S. dollars in 2011, the consumption structure and industrial structure had entered a new period of rapid escalation. The 18th CPC National Congress set the ambitious goal of doubling residents’ per capita income of 2010 by 2020, so Chinese market will release a purchasing power reaching 64 trillion yuan. The McKinsey & Company of the United States estimates that consumption will be the largest driving force of China’s GDP growth by 2020.

Third, China will accelerate the pace of industrialization and urbanization. China currently is in the middle and late period of industrialization, with the level of urbanization only reaching about 51 percent, so it needs at least 20 years or more to reach 70 percent, the level of high-income countries. By then, over 300 million people will transfer from villages to cities. It is predicted that the urbanization will contribute 2 percent to 2.5 percent to GDP growth and create unprecedented consumption potential and market expansion.

Fourth, China’s demographic dividend will continue to exist for some time. Admittedly, its demographic dividend is weakening due to population ageing. However, China’s old-age dependency ratio will remain at relatively low levels, and the country will maintain a huge work force over the next 20 years, according to forecasts by related U.N. institutions. Furthermore, the overall quality of Chinese workers has increased significantly, and the country still has the world’s largest and best trained work force.

Fifth, China has great advantage in infrastructure and other aspects of “hard environment.” Many countries, including developed ones, do not have the complete transportation and information networks or mature division of labor system China possesses. After decades of rapid development, China has closely integrated into the global value and supply chains.

Sixth, China has constantly improved its policies, systems, and other aspects of “soft environment.” Over the past 30 odd years since the Reform and Opening up, China has established a policy mechanism and legal system suitable to both domestic and international conditions by studying its own national conditions and drawings on the experience of foreign countries. According to the 2012 China Business Climate Survey Report released by the American Chamber of Commerce in China, 78 percent of respondents rank China among their top three destinations for global investment, and 82 percent plans to increase investment in China. Most importantly, China has long maintained political and social stability, forming a sharp contrast to many turmoil-hit countries and regions. Overall, China remains an ideal tourist and investment destination.

A burgeoning China brings to the world more opportunities, not threats

China’s sustained development and growth have brought tangible benefits to the world and it also a fresh driving force for its future development. From the Asian financial crisis in late 1990s to the international financial crisis of today, if it is without China’s persistent contributions, the world economy would have been entirely different.

Many countries say that the economic and trade relations with China especially the robust growth of exports to China is the major factor for them to survive in the international financial crisis and to avoid economy downturns. A survey of the IMF shows that China has become the biggest or second biggest trading partner of 78 countries in the world. In the decade since China joined the WTO, China kept an average annual import of 750 billion U.S. dollars, creating over 14 million jobs in related countries and regions. The profit repatriation by foreign-invested enterprises cumulated to 261.7 billion U.S. dollars, at an annual growth rate of 30 percent. In the 12th Five-Year Plan period starting from 2011 to 2015, China is expected to import goods worth more than 8 trillion U.S. dollars, which means it will create enormous business opportunities to the world.

According to the NIC report, it is expected that China’s proportion in the world economic growth will be over 33 percent around 2025, which is far more than any other major economies. The future development of China will better benefit its neighboring countries and worldwide.

The development and growth of China will enhance the force for safeguarding world peace. China is a big country that is traditionally in favor of peace. Former U.S. Secretary of State Henry Kissinger pointed out that the Chinese nation is one of the most peaceful nations in history, and China has never invaded other nations by force. In the future, China will also be a force for peace.

At the Hamburg Summit held recently, former German Chancellor Helmut Schmidt said," Throughout the history of China, China has never established colonies in other countries. In China's foreign policy, plundering the territory of other countries has never happened. China has been the most peaceful country in the history of the world." Since the People’s Republic of China was founded more than 60 years ago, China has always been an internationally recognized force of peace.

The world is changing and China is changing, but China’s commitment to safeguard world peace and promote common development will not change. In the report to the 18th National Congress of the CPC, Hu Jintao pointed out that we must firmly adhere to peaceful development and takes it as one of the eight basic requirements for winning a new victory of socialism with Chinese characteristics under the new historical conditions.

In the future, China will continue to hold high the banner of "peace, development, cooperation and win-win", promote equality and mutual trust, inclusiveness, mutual learning, and win-win cooperation spirit, and make its due contributions for the peaceful development of the world, the prosperity and progress of mankind with a more open, inclusive and cooperative attitude, and with more positive and promising efforts.

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