China should not be blamed for eco­nomic slow­down

The Pak Banker - - OPINION - Yang Qing

CHINA and other world economies share weal and woe to­gether amid global eco­nomic slow­down, and it is un­rea­son­able to put all the blames on the world's se­cond largest econ­omy alone. With the an­nual ses­sions of China's top leg­is­la­ture and political ad­vi­sory body ap­proach­ing, the Chi­nese econ­omy and the so-called spillover ef­fects of its slow­down has be­come a hot topic again. As a mat­ter of fact, the lack­lus­ter global econ­omy comes along with a com­pli­cated process -- the pro­found eco­nomic re­struc­tur­ing of the United States and Euro­pean coun­tries, con­tin­u­ous de-lever­ag­ing, weak de­mand, and re-bal­anc­ing of the global econ­omy.

In many ar­eas, China is not an ex­porter of the eco­nomic cri­sis, but an ab­sorber and bearer of mul­ti­ple pres­sures. Fac­ing the cri­sis stem­ming from Western na­tions, China and other economies, which stand to­gether in the same global value chain, should jointly meet the test of trans­for­ma­tion.

Sta­tis­tics can prove that the world econ­omy is not dragged down by China, whose con­tri­bu­tion to it cur­rently ac­counted for up to 30 per­cent. De­spite the slow­down in im­ports, the amount of China's im­ports of bulk com­modi­ties is not de­creas­ing.

In ad­di­tion, Chi­nese tourists were still the ma­jor con­sumer group as they spent 1.2 tril­lion yuan (184 bil­lion U.S. dol­lars) over­seas last year, ac­cord­ing to an es­ti­mate by For­tune Char­ac­ter, a lux­ury mar­ket con­sul­tancy.

In the global value chain, China is trans­form­ing from a big im­porter of bulk com- modi­ties into a key player of con­sumer goods and ser­vices.

The Asian gi­ant is also in evo­lu­tion from a world fac­tory into a global end mar­ket.

In the opin­ion of Ge­orge Mag­nus, a re­searcher with the Univer­sity of Ox­ford China Cen­ter and se­nior ad­vi­sor to the United Bank of Switzer­land, due to such fac­tors as the enor­mous size of the Chi­nese econ­omy and its struc­tural re­form, the coun­try is ex­port­ing a "new div­i­dend" to the global econ­omy.

He said that de­spite a slow­down in its eco­nomic growth, the coun­try will not cause trou­ble to other economies.

At a time of eco­nomic glob­al­iza­tion and re­gional in­te­gra­tion, China and the world econ­omy has formed a com­mu­nity of com­mon des­tiny long ago.

In this con­text, all coun­tries should co­op­er­ate and work out new mea­sures in re­form to tide over the dif­fi­cul­ties, rather than point­ing fin­gers at each other.

As a mat­ter of fact, the Chi­nese econ­omy is in no way as pa­thetic as some de­scribed.

Last year, con­sump­tion con­trib­uted up to 66.4 per­cent to the coun­try's GDP growth, set­ting a new record since 2001. The ter­tiary sec­tor ac­counted for 50.5 per­cent of China's GDP, 10 per­cent higher than that of the man­u­fac­tur­ing in­dus­try. Against the back­drop of a 0.4 per­cent de­crease in its growth rate, China man­aged to cre­ate 11 mil­lion jobs in 2015, 300,000 more than the pre­vi­ous year.

Driven by the on­go­ing sup­ply-side struc­tural re­form, China has wit­nessed the up­grad­ing of its eco­nomic struc­ture de­spite the slow­down, as well as the rise of new in­dus­tries along with the van­ish­ing of old, out­dated in­dus­tries, which led to the ex­pan­sion of job cre­ation.

The pur­ported signs of crash of the Chi­nese econ­omy by some in a rush are, in ef­fect, a strong proof of the eco­nomic trans­for­ma­tion China has been push­ing ahead with, ac­cord­ing to John Ed­wards, a fel­low of the Syd­ney-based Lowy In­sti­tute for In­ter­na­tional Pol­icy. For global in­vestors, China abounds with op­por­tu­ni­ties in the near fu­ture.

In 2015, ven­ture cap­i­tal­ists in­vested a record 37 bil­lion dol­lars in China, more than dou­bled the pre­vi­ous year's tally, ac­cord­ing to data from Bri­tish con­sul­tancy Pre­qin Ltd..

The com­pany held that China, with more fo­cus on in­no­va­tion and im­prov­ing qual­ity, has been emerg­ing as a le­git­i­mate chal­lenger to the United States for lead­er­ship of the tech­nol­ogy in­dus­try.

One ba­sic fact that should be ac­knowl­edged is that China will by no means en­counter over­whelm­ing eco­nomic cri­sis nor re­ces­sion, thanks to its huge eco­nomic ag­gre­gate, cur­rent mar­ket open­ing and so­cial re­form, peo­ple's last­ing pas­sion for in­no­va­tion, as well as highly ef­fec­tive govern­ment con­trols. Just as Chi­nese Premier Li Ke­qiang has put it, the Chi­nese econ­omy has been grow­ing amid chal­lenges.

It is ad­vis­able that some coun­tries stop point­ing fin­gers at China and aban­don the no­to­ri­ous zero-sum mind­set.

It is wise for them to turn to fo­cus on work­ing with China, through global plat­forms such as the Group of 20, to en­hance pro­duc­tion ca­pac­ity co­op­er­a­tion world­wide and in­ject greater im­pe­tus into the slug­gish global econ­omy.

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