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China Injects Confidence into World Economy as an Anchor

Submit Time:15-09-2017 | Zoom In | Zoom Out

Author:Chen Ling | Source:People's Daily (August 9, 2017)

Abstract:

A good knowledge of the Chinese economy may make it clearer that China's way of transformation is to foster "new drivers" for economic growth rather than just resuscitate "old engines." 

"The Chinese economy has again failed those anxious and loquacious negativists." "The momentum of the 'world economic engine' is still sufficient." "We must embrace the world, especially China."... The resilience and sound fundamentals of the Chinese economy have won praise from foreign scholars, think tanks and media after China recently released its second quarter economic figures. Such Western "re-discovery" of the Chinese economy fully shows that China has remained an anchor that continues to inject confidence into the global economy. 

Everyone wants to find certainty in an uncertain age. Compared to the world economy beset by an economic downturn, the Chinese economy stands out with stable and growing performance. For eight straight quarters, China managed to keep its economic growth between 6.7% and 6.9% percent, and its industrial growth reached its best level after 2015. This amazing economic performance, together with improving employment, stable growth, structural optimization, and more "valuable" growth, made foreign media exclaim with admiration, "China is an anchor of stability for the market." 

Nobel economics laureate Ronald Coase pointed out that economists should go back from what he termed "blackboard economics" to the real world. It seems more or less vague when one stands in the distance, observing China with a "telescope." Stepping into the real life of the Chinese people, observing what changes are taking place with a "microscope", may make one have profound feelings. New technologies, emerging industries and novel applications, such as entry of store by scanning QR code, automatic payment, unmanned supermarkets, wallpaper TVs and smart homes, turn what's on paper into reality, making life more convenient, delighting people with new experiences, and enhancing their way of life. These changes explain why foreigners in China cannot help but say that "Once you leave China you'll find yourself falling behind." The improvement in people's lives shows China's economy continues to rise. Changes in the micro-life reflect China's macro-economy that stabilizes and grows as evident by accelerating transformation, new development, and enhancing vitality. 

Time always finds the most profound answer to any doubt. A few years ago, before China's "Internet Plus" strategy became the buzzword, many Western scholars doubted whether the transformation and upgrade of traditional industries could inject new impetus into the country's economy. When shared bikes are seen all over the streets, when "Fuxing" high-speed bullet trains are riding in the Beijing-Shanghai high-speed railway, when China's household electrical appliance enterprises transform from selling products to providing intelligent equipment, they may be more convinced that China's transformation idea has not only resuscitated old engines but fostered new drivers for economic growth. "China, once known for its cheap labor, has contributed to the world in terms of innovation," The Wall Street Journal said in a report. Innovation is now emerging as a new engine as China marches toward its second-phase miracle. From this perspective, China's economic slowdown in the past could be described as a proactive adjustment under the economic transformation rather than a lack of impetus. 

What also impresses the world are China's efforts to break "hard constraints", such as eliminating backward production capacity, basing measures on local circumstances, and taking targeted policies to cut excessive urban real estate inventory as well as focusing more on preventing and defusing financial risks. The past few years also saw China's endeavor to push forward the supply-side structural reform and absorb painful self-adjustments in a bid to solve the underlying contradicts and problems in economic development. The reform managed to prevent both "black swans" and "grey rhinos." In addition to eradicating the sources of risks, China also developed a set of development concepts that has inspired the world. In the past, many developing countries deemed Western countries as their role models, and were keen on learning from the West. But both developing and the developed world have since been learning from the experience of the East. 

"Why is the Chinese economy so strong?" is a question that has been asked countless times. As British economist Martin Wolf pointed out, some people wrongly forecast the performance of China's economy because they've been used to finding answers for this "China riddle" using the Western way of thinking. Misunderstandings about the Chinese economy result from prejudice and insufficient knowledge about the country. Some foreign historical scholars have recommended getting rid of the "West-centered theory" and adopting the Chinese way of solving issues as a better way of observing China. 


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