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China Has Become the Primary Driven Force on the Global Market Economy

Submit Time:08-02-2017 | Zoom In | Zoom Out

Author:Jia Jinjing | Source:people.com.cn- People’s Daily Overseas Edition

Abstract:

December 15 marked the 15th anniversary of China’s official accession to the World Trade Organization (WTO). In the past 15 years, China has grown from the world sixth economy to the second largest economy, and its total volume of cargo export grew from 4.3% of the global total in 2001 at the sixth place in the world to 13.8% of the world total in 2015 at the first place in the world.  

Behind the changes of scale is the profound change of world economic pattern. Over the past 15 years, the proportion of the emerging market economies and developing countries in the global economic aggregate grew from less than 40% to over 50%, and the pattern of “developed countries making investment and developing countries accepting investment” has been changed to investment to each other. In the meantime, China has gradually stepped to the center of the stage of world economy. At present, China is the first largest product producer, the first largest consuming market, the first largest foreign investment absorber and the second largest outbound investor in the world. It is true that the multilateral trading system will not be vigorous without the pushing and protection by China.  

In today’s world, all economies are mutually connected as a community with common future in which all depend upon each other and no one can realize development separately. Nowadays, almost no industrial product can be made separately from the global value chain. It can be said that a global market covering most countries in the world with daily increasing close ties has become the foundation of world economy. In this global market, China, with its about 30% contribution to world economic growth and the largest portion of trade volume, has become the indisputable primary motive force.  

However, although China has fulfilled almost all its commitments when entering the WTO in the past 15 years, some member countriesdeclared openly to refuse to recognize the “market economy position” of China by violating the agreement signed when China entered the WTO.  

The true intention of the so-called “not recognizing the market economy state of China” is to still use the selling price of similar products on the “third country market”, instead of the market price of China as the reference when a so-called “anti-dumping” investigation is launched against China, and to charge high custom duty on products from China on this basis. However, such practice can actually hurt these countries themselves. Today, the market share of China ranks the top in the world for about 1/3 categories of commodities on the global market. The number of varieties with “world market share at the first place” of China is almost two and half times that of the United States, who ranks the second, and most of them are medium and high end products. What will be the consequence of refusing to recognize the market economy state of China on such a world market? Obviously, it will not protect the industries of the same category of their countries as they desire, instead, the importers will take a detour by transit from other countries, to avoid the high custom duty. As a result, the benefit will be obtained by the transit countries, and the importing countries charging high custom duty can only get the losses to consumers without reason.  

  

At present, the world economic situation is complicated, and there are a number of “reverse globalization” factors, however, the general trend of mutual integration of the global market will not change. In 2016, the G20 Global Trade Growth Strategy issued at the G20 Hangzhou Summit pointed the orientation for the global trade development. It is the way to economic prosperity only by reducing trade cost, strengthening coordination on trade and investment policy, promoting service trade, enhancing trade financing, setting trade business index and promoting e-commerce to realize sustainable development of trade. Any action against the historical trend, such as trade protection, building “small trade circles” and going against multilateral trade system, will finally be washed away by the surge on the global market.  

 (Author entity: Chongyang Institute for Financial Studies, Renmin University of China)  


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