In recent years, China's development has slowed down, as with other
economies in the world, as a result of the COVID-19 pandemic, geopolitical
conflicts, and other factors. Some Western scholars and research institutions
claim that after four decades of growth, China’s rise has peaked and it will
never catch up with the US. As a response, Chinese authorities have released
this month a succession of data on the Chinese economy for 2023. Among them,
the most concerning is the annual GDP growth of 5.2 percent, not only higher
than the global growth rate that is expected to hover around 3 percent but also
ranking high among the world's major economies, outperforming the US and the EU
by a wide margin.
اضافة اعلان
Is China's economy a risk for the globe?
According to the World Bank's forecast of the GDP and growth of major
economies in 2023, China's contribution to world economic growth surpasses that
of the Americas, Europe, and Japan combined, securing its position as the
world's leading economic powerhouse. Why do some slow-growing, or even
stagnant, economies in the west show their teeth at a faster-growing country
across the ocean instead of minding the perils they cause?
The “Peak of China’s Rise” theory first appeared in 2021, when two
professors in the US co-authored an article that declared that China's economic
rise has peaked under the dual pressure of internal economic slowdown in the
past decade and external containment in recent years. Since then, Western
forums have been peppered by various statements about the assumed peak,
including, but not limited to, a peak due to a slowing economy, vanishing
demographic dividends, a technology crackdown by the US, a worsened investment
environment, etc.
In the eyes of Western economists, China is grappling with a series of
daunting problems: weakening productive force, skyrocketing productive costs,
dropping returns from investment on infrastructure, an exorbitant debt-to-GDP
ratio that is even higher than the US, a peaked and already-shrinking gross
population and workforce, retreating foreign companies and investors, and a
lack of innovation resulted from overstretching state-owned enterprises and
their under-supported private counterparts. For the Chinese people, on the
other hand, everything looks familiar.
The “Peak of China’s Rise” theory is essentially a stale steak on a fresh
plate. It is in the same vein as the "China Collapse" theory, which
has been running rampant for 20 years. As two high-frequency phrases in
China-related discourse construed by the west, the two theories recur
alternately on the underlying perception that China poses "threat" to
western countries’ global hegemony. The longer the “threat” persists, the
stronger the desire to see it "collapse." This is also part of the
US’s anything-but-China strategy. So, rather than a miscalculation of facts,
the “China Collapse” theory is more of a subjective assumption. As former US
President Dwight Eisenhower opined, one dollar spent on propaganda is five
dollars spent on defense.
China’s foreign investment
In 2023, China's actual use of foreign investment recorded a year-on-year
decrease, giving pessimists an opportunity to hype up such narratives as
“massive withdrawal of foreign investment from China” and “quitting investment
in the Chinese market." Western media sensationalized that China's focus
on safeguarding national security may “deter” foreign investment and “create
barriers to capital flows into China," in ignorance of the enormous base
of foreign investment in China and the context of an economic contraction
worldwide. In fact, China's irreplaceability in the global economy lies not
only in its tremendous market but also in its complete industrial system, which
is the most valued feature for foreign investors. The direction of capital
flows provides the best proof. In 2023, foreign investors newly set up 53,766
foreign-funded enterprises in China, an increase of nearly 40 percent
year-on-year. Sector-wise, the proportion of investment in high-tech industries
hit a record high of 37 percent.
Although many emerging and developing countries also offer preferential
policies to attract investment, European and American companies place greater
value on a stable and predictable business environment than cost-reducing
policies. This is precisely where China's biggest advantage lies in the past 40
plus years since the reform and opening up, and it is where developing
countries can draw experience from.
The most shining instance is Tesla. While operating in the US for more than
a decade, Tesla’s highest annual production of electric vehicles was around
30,000. After completing the Shanghai factory in 2019, it delivered 480,000 EVs
in the following year. Over the past five years, the return on China's foreign
direct investment has reached 9.1 percent, much higher than the 3 percent or so
of Europe and the US and higher than that of major emerging economies. Multiple
international trade organizations, including the American Chamber of Commerce
in the People's Republic of China (AmCham China), expressed that for many
foreign companies, the Chinese market is not an "option" but a
"must." As the costs of labor and land are going up and pollution is
put under stricter regulation in China, some foreign enterprises adopt the
“N+1” strategy to relieve the pressure of rising costs, i.e., while maintaining
the main production base in China, they set up branches in other countries as
well to diffuse risks. This is market behavior that should not be
overinterpreted.
According to western academics, China's demographic dividend has supported
its rapid development over the past three decades. Now China's birth rate is
falling, which will inevitably bring down its economic growth rate.
Labor input is important for economic development, but a more significant
factor is the efficiency of labor input, which can be calculated by multiplying
the quantity of the labor force by their education level. In China, for
example, most people enter the labor market at the age of 16 to 25. Their
average years of schooling are 13.8, against 10.8 years for the entire working
population. In starker contrast, the duration of schooling for 60-year-old
retirees averages 6. This tells us that the amount of effective labor in China
is increasing year over year in the process of population aging. In this sense,
China's "demographic dividend" has not disappeared, and a
"talent dividend" is in the making.
For the global economy, the uncertainties mainly come from changes in the
external world, such as geopolitical conflicts, the policies of the Federal
Reserve, and the decline in external demand. Coupled with a shrinking
international production investment system as global supply chains are
restructured, these are challenges that all countries, including China, are
facing. But China has developed its own unique advantages and new engines for
economic growth.
What is next for China's economic development?
A report on January 17 by German weekly economic magazine Wirtschaftswoche predicted
that China's economy will continue to grow at a relatively high rate in 2024.
It noted that structural changes in China's economy, the world's
second-largest, are accelerating. Beijing is investing heavily in high
technology and innovation in a bid to play a leading role globally in areas
such as artificial intelligence (AI), green energy, and electric vehicles.
China’s export of high-tech industries and new energy vehicles has exceeded
traditional labor-intensive products and become a new engine for its foreign
trade growth. For example, its automobile exports in 2023 have overtaken those
of Japan, marking China's transformation to high-end manufacturing. One out of
every three cars exported from China is electric. The transformation of new
energy vehicles from an unfavored industry to China's most competitive emerging
industry takes place within only a few years. Many people are aware that
China's new energy vehicle production and sales have become the world's first,
but some may not know that China accounts for about one-third of the over $100
billion global investment in key technologies for new energy vehicles in 2022.
The seeds sown in the spring are bearing fruit. Chinese automobile companies
have begun to export in batches electrification and intelligent technology to
multinationals. Examples include investments in Chinese EV startups XPeng and
Leapmotor from Volkswagen and Stellantis, respectively. S&P believes that
such "reverse" joint ventures in China will increase in 2024. China's
enhanced independent innovation capability is promoting international
cooperation at a higher level.
The World Economic Forum (WEF) 2024 Annual Meeting was convened not long ago
under the theme "Rebuilding Trust." This reflects an indisputable
fact: intensifying confrontation and a lack of trust have become major
obstacles to development in today's world. The international community needs
more trust and cooperation to better respond to crises and challenges. If
Globalization 1.0 is an era of colonialism and Globalization 2.0 is an era of
capital, then Globalization 3.0, promoted by China, is an era of common
development. China accounts for one-third of global economic growth. The
benefits of its sustained growth can be felt in every corner of the world. The
New York Times admits, “If China continues to chug along, it could portend a
sustained recovery for the United States and other nations now bouncing back
from their pandemic lows. If its economy further slows, it could drag down the
rest of the global economy."
So, to answer the question, “Which country will be the next China?” The
answer is clear: the "next China" will still be China, only better.
Disclaimer:
Views expressed by writers in this section are their own and do not necessarily reflect Jordan News' point of view.
Read more Opinion and Analysis
Jordan News
.jpg)
.jpg)
