The anticipated interest rate hike by the US Federal Reserve and China’s economic slowdown have been the two major hot topics among the media and general public recently. Many friends expressed their concern over China’s economic performance, the media even made a number of negative and pessimistic comments. People cannot but ask if there is really something wrong with China’s economy.
As an old saying goes, seeing is believing. During my recent annual consultation in China, what I saw was profoundly different from the media’s portrayal: the society was stable, market prosperous, and companies’ production and innovation brisk. As income increases steadily, people are having a happier and more abundant life, with enthusiasm for consumption and hope for the future running high.
So why is there such a huge contrast between media reports and the real facts? Well, there might be certain individuals that view China’s development through tinted glasses, but the bigger reason for many people I believe is their lack of deep understanding of China’s real situation and the government’s policies and measures. So here I’d like to share some of my observations and thoughts.
Thanks to the reform and opening up policy over the past 30 odd years, China has achieved a leap from a low-income to a medium-to-high income country, with an average annual growth rate of 9.8 percent, which has been lauded as a “growth miracle” by the international community. This is by no means achieved by good luck.
We have overcome one unimaginable difficulty after another during the course of lifting the country from “poverty and blankness” when the People’s Republic was founded to the world’s second-largest economy. To use a vivid metaphor, China’s economy is like the plum flower that blossoms defying frost and snow, rather than a greenhouse flower. No matter the past, present or the future, China’s economic growth will not be held back by any challenge.
Today China’s economy has entered a state of “new normal” with accelerated transformation toward a higher end. Instead of obsessively pursuing growth speed, the core concept and the strategic path of such a process is to promote transformation in five aspects, namely: realising innovation-oriented growth; intensive growth; consumption and investment driven economy; the decisive role of the market in resource allocation; and inclusive and shared economic benefits.
Sailing in right direction
Initial success has been achieved in such an endeavour – the economic structure has been further optimised and upgraded; the industrial structure is more sound and balanced with the service industry accounting for half of gross domestic product (GDP).
Consumption has contributed 60 percent to economic growth, high-tech industry has maintained sustained and rapid growth, new forms of industries like “internet plus” and new products begin to play a leading role; new growth points, such as the green economy featuring energy saving and environmental protection, keep cropping up.
Against the overall global economic backdrop, many countries have encountered difficulties. The Chinese economy is also under downward pressure. President Xi Jinping vividly likened China’s economy to a huge ship sailing on the sea. Any ship, whatever its size, may occasionally experience unstable sailing.
To analyse China’s economy, people should focus on whether this ship is sailing in the right direction, whether it has sufficient locomotive power and supply of energy. In the first half of this year, the Chinese economy realised hard-won growth of 7 percent, which is still among the fastest in the world.
What’s more, this growth rate achieved on an economic base of $10 trillion (about R140 trillion) is much bigger than the previous double-digit growth in terms of real volume. China’s economy still enjoys great potential, space and tenacity. Whatever happens, China will stay committed to deepening its reform on all fronts while opening even wider to the outside world.
We will work in a co-ordinated way to ensure growth, promote reform, make structural adjustment, improve people’s well-being and forestall risks, enhance macro-regulation, ensure steady and fairly rapid economic development and constantly advance economic transformation.
China’s economic transformation will gather enormous positive energy to boost the world economy. Some people believe that the slowdown in China’s economic growth may trigger another round of world recession and the economic and the financial reform in China will add destabilising factors to the world financial market, as well as relevant economies. However, if we think it over carefully, such judgments are totally groundless.
In the first half of this year, China’s economy still contributed 30 percent to world economic growth and China has not reduced the total quantity of its commodity imports. Under the downward pressure, China has not over-issued its currency, nor introduced strong fiscal stimulus, nor transferred pressure and problems to the outside world, which demonstrates China’s responsibility to the world economy.
China-Africa co-operation
From a long-term perspective, China is committed to addressing the problem of unbalanced, uncoordinated and unsustainable development and seeking a higher quality and efficiency of economic development so as to make a greater contribution to the development and stability of the world economy.
The economic transformations of China and Africa are highly complementary. Both sides could offer the other opportunities, which will promise a new and broader space for future co-operation. Currently, the value of industrial output in the sub-Saharan region only accounts for 0.7 percent of the global total. The manufacturing industry in most African countries contributes less than 15 percent to GDP. Although industrialisation is a weak point in Africa’s economic transformation, it will be the engine for future development. China is promoting international industrial co-operation.
It is not simply products export, but export of industries and skills, which will effectively help African countries accelerate the building of a complete industrial system and manufacturing capability. China will continue to uphold the principles of “sincerity, real results, affinity and good faith” and support Africa’s economic transformation so as to achieve win-win results.
In December, the summit of the Forum on China-Africa Cooperation will be held in South Africa. Both sides will take this opportunity to align our development strategies and together map out the grand blueprint for our future development. South Africa is a pivotal partner of China in Africa.
The two countries are actively implementing the Five-to-Ten Year Strategic Programme for Cooperation and working together for new outcomes in the alignment of our industries and bilateral co-operation on industrial capacity, special economic zones, blue economy, infrastructure building, human resource development and finance. At the same time, China highly values South Africa’s position and role in Africa and is ready to work with South Africa to boost the continent’s economic development.
China can’t develop itself in isolation from the world, and vice versa. It is my hope that all countries in the world could understand and support China’s economic transformation. Let us look forward to China’s “transformation miracle” to make a greater contribution to world economic growth.
* Tian Xuejun is China’s ambassador to South Africa.
** The views expressed here do not necessarily reflect those of Independent Media.
BUSINESS REPORT