Johannesburg - Mindful that the economy is the business of power, China has maintained a 9.2% growth rate consistently for four decades starting from 1978, while other developing countries have only managed a modest 3% hike in their economies.
But a rising China intends to take the world up along with it, and not just hoard the resultant yield for domestic consumption.
This was the thrust of the 10th Mapungubwe Annual Lecture delivered virtually by Professor Justin Yifu Lin, Dean, Institute of New Structural Economics, Peking University, this past Wednesday.
The theme for the 2022 Lecture organised by the Mapungubwe Institute for Strategic Reflection (MISTRA) in conjunction with the University of Johannesburg (UJ) was China’s New Development Paradigm and Future under the Great Changes in the World Unseen in a Century.
In 1900, there were eight powers, inclusive of these the US, UK, France, Germany, Italy, Russia, Japan and the Austria/Hungarian Empire. “Their combined GDP (gross domestic product) to the global GDP was 50.4%,” Lin said. “In 2000, there was the Group of 8 (G8). The seven member countries remained the same and the fall of the Austria/Hungarian Empire was replaced by Canada. Their combined GDP against the global GDP was 47%.”
When the combined economic prowess of the world giants was falling, China’s kept up a steady increase, Lin pointed out. This decline in their economic power saw the G8 being replaced by the G20 after the 2008 global financial crisis, he said.
In 2018, the G8 contribution fell to 37.4% in the world while China gained 6.9% in 2000 and 16% in 2018 while the G8 plummeted in the same period by around 23%.
At least 80% of the loss of the G8 was due to the rise of China, Lin said.
China’s economic rise will definitely have a bearing on the military might of the US but because Beijing is not inward-looking, according to Lin, they are hoping for a win-win situation with Washington’s co-operation.
This Sino upward trajectory did not sit well with America who, during the Obama years deployed its navy to encircle China militarily, Lin said. The Trump administration kicked off a trade war with China.
The Biden administration is trying to isolate China, said Lin, the author of such books as “The China Miracle: Development Strategy and Economic Reform, Demystifying the Chinese Economy” and “The Quest for Prosperity: How Developing Economies Can Take Off”.
Lin cautioned that tension between China and the US would threaten peace in the whole world.
Even when China was already projecting an annual 4% growth in their GDP up until 2049, this boon was intended to carry positive spin-offs for the world economy and not just benefit the nation of 1.4 billion people, Lin said.
Lin, a former chief economist at the World Bank, said domestic circulation was the mainstay of China’s economy, and rise. But since they were not endowed with all they needed, especially for manufacturing, “China will continue to import, especially natural resources and mineral products”.
Master of ceremonies Dr Tshilidzi Ratshitanga, who sits on the Board of MISTRA made the point that they were not hosting Lin merely for the fun of it but to see what lessons South Africa could draw from the Chinese model of growing the economy.
Respondents to the Lecture, Dr Philani Mthembu, executive director at the Institute for Global Dialogue and Professor Fiona Tregenna, South African Research Chair (SARChI) in Industrial Development both variously zoned in on how South Africa and the continent could, respectively, benefit from the lessons of Chinese growth.
The economy is the backbone of power, in response, Mthembu concurred with Lin and pointed out that “over time, as the US loses its economic power, it will (see) an impact on its military strength”.
The consensus seemed to be that this development augured well for global trade as, in the words of Mthembu: “The US economy will no longer be the pre-eminent one.”
While China used domestic circulation as a key to growing their economy, Africa – with a combined population close to China’s – could use regional integration to grow, said Tregenna.
Lin told the 10th Mapungubwe Annual Lecture that “every country has the possibility to be successful” especially if it could “focus on its competitive advantage”.
South Africa’s competitive advantage was its natural resources, a market which exists in China. Lin said apart from this, South Africa had great potential because of its young population and good education, among others.
The erratic power supply, Lin said, was a barrier to economic success. Without mincing his words, he enthused: “China’s economy will continue to rise.”
There was no doubt that to succeed, South Africa – and the continent of Africa – needed to trade with China and learn so as to achieve the near-impossible growth rate that Beijing showed was attainable.
In his vote of thanks, MISTRA executive director Joel Netshitenzhe said they could not have chosen a better guest speaker for the 2022 address after the Covid-19 pandemic.