A sustainable growth marathon is better than a sprint
When China overtook the United States as the world’s top goods trader in 2013, China’s celebrations were led by former commerce minister Gao Hucheng. On Tuesday, in response to news that the US had retaken the lead by about $20 billion in 2016, Gao expressed optimism: For major trading powers, short-term data anomalies are perfectly normal.
Gao is more focused on a change of trajectory. China is weaning itself off its dependence on cheap exports and foreign money. For the past more than three decades, China has been the acknowledged master of sustained growth. The trick now is to move up the value chain and convert that “sustained” growth into “sustainable” growth.
Fluctuations in currency exchange rates and commodity prices slowed down China’s exports and imports in 2016, but as Gao says, it is no longer about blind expansion; it is about resources, it is about the environment. The era of “damn the torpedoes, full steam ahead” development has ended.
Today, says Gao, growth must come through quality and efficiency. Cheap labor, land and resources are no longer the order of the day. Now, a significant portion of China’s trade involves imported raw materials and assembly of imported parts into finished products that are then re-exported.
Labor and land costs are rising rapidly. The old pattern is failing. Dirty factories harm the environment. Foreign trade relies on foreign exchange that brings uncontrollable vulnerability. Protectionists are circling like vultures above the world economy. The solution lies in higher value-added and higherquality products. And the progress made by China is already noteworthy.
In 2016, exports of large and heavy equipment grew steadily. This progress was shadowed by growth in aerospace and optical communication products. Processing trade — putting together imported bits and pieces of other countries’ products and reshipping them overseas — dropped to less than onethird of total trade.
Export standards have improved, along with techniques, brands and services in what Gao describes as a “historic transformation”. The rest of the world could benefit from China’s sustainable strategy, as “Made in China” makes a semantic shift from “cheap and shoddy” to “reasonable and reliable”.
China hopes to import $8 trillion worth of goods in the next five years. Chinese travelers overseas will carry with them huge amounts of revenue for entrepreneurs to their destinations. What China seeks is common prosperity: a community of shared future for mankind. That will inevitably mean coordination, consistency of governance and economic globalization: an open, inclusive, balanced society that benefits us all.
As protectionism rears its ugly head, there will be new setbacks. China will not waver from restructuring or from its commitment to open trade and free trade for all.