China economy
China economy
China's economy has grown at an
extraordinary rate. In Europe and the United States, the mood is changing
rapidly and rapidly. China is so big that it contains different facts at the
same time. The global economy itself is beginning to crumble.
China's economy has grown at an
extraordinary rate over the past 40 years in many areas. The size of its
domestic market, the technical prowess of its leading companies, even space
exploration feats, and its growing army may have astonished the rest of the
world.
The key question now is whether China will become the center of the
global economy. There is no doubt that China's growth and development at this
point means that it will forever be a major player in the global economy. But
there are reasons to doubt that it will be the center, the unique center of the
world economy, partly because other parts of the world will not want to allow
it, and partly because the world economy itself is fragmented to some extent.
Fragmentation is starting to take place regionally rather than in a globalized
economy.
I went to China as a student about forty years
ago. And it was a place that was very different from the high-tech economic
superpowers we see today. There was a ration of grain, cotton, and many other
basic commodities. And it took four days for the train from Hong Kong to
Beijing to arrive. The same journey will take nine hours today.
To put this extraordinary change in
context, the figures I consider are average GDP growth. And from 1979 to the
end of 2018, China's GDP growth rate averaged 9.5 percent a year. As far as you
know in history, is this unique? I think it's unique in the following sense.
There are other countries that have
temporarily boosted their growth rates. But you have never seen anything of
this size. Go back 2,000 years when everyone was equal. The point of gravity,
the center of gravity of the global economy, mainly follows the size of the
population. And then mark. With the Second and Industrial Revolution, you
looked beyond Europe and then North America.
In the last 40 years, it has been
moving back to Asia, Asia, and China. But in a sense, it's really coming back
to normal. Yet it is unusual for them to do so so quickly, even if they return
to normal, as I call it. How did they do it? In the late 1970s, he launched a
program of market reforms that really engulfed the entire Communist Command
economy.
By the mid-'90s, they really began to
put in a tone to attract foreign direct investment. But I think the real key
change in China came again, perhaps in the mid-1990s, when China began allowing
farmers' sons and daughters to migrate from villages to these big industrial
cities. I would say that the Chinese Communist Party has in a way proved that
capitalism works to liberate capitalism and the labor movement.
But let me add another aspect of
this, that at that time Western high-income countries were pursuing
globalization because, in the '80s and '90s, you saw a great push for more
liberal world trade. Therefore, globalization was at the behest of high-income
countries. But China could be right.
A big part of the answer to the
question we are asking is, will China become the center of the world economy,
can this development model continue to work, because what bothers me is that
with all this success, China is still a relatively poor country. Isn't that
right? In fact, China ranks 61st in the world in terms of average per capita
income. Overall, China is still a very developing country. But it is also a
very non-Muslim country because it has all the high-tech capabilities. Got this
amazing infrastructure.
I think it's a very different kind of economic
beast, from a developed country that we can see elsewhere in the world. Let's
look at the average Chinese income compared to the United States, the world
leader. And we can see that although this whole economic revolution was very
bad before it happened, it is still not rich. China is so big that it contains
different facts at the same time.
The Chinese middle-class numbers 400 million
people these days. That's obviously more than the entire population of The United States. But there are also a billion Chinese who are very few.
Economists call it the middle-income net. You have to move towards a certain point, rapid growth.
Then you will stagnate before you can
pull everyone into the middle class. I mean, one of the reasons people think
that getting a middle income from the poor is a very different process from
getting a middle income to a high income. Chinese consumers spent about .3.7.3 tons
last year. He is, by the way, more than that
The full GDP of the Japanese economy
but now I think we are entering a very different phase. And this is
characteristic of China's emergence as a technological power. I think this is
very important because one thing that emerges from economics and economic
history is that if there is a way out of the middle-income trap, it is by
changing its growth pattern to tax development and technology. The aim is to
mobilize the labor and capital generated by
Development. China is a potential and indeed a
middle-income country that leads the world in many areas of technology. Let me
just put some meat on those bones.
Let's take a look at the areas in which China
is either a world leader or at least near modern, wind and solar, online
payment systems, digital currencies, aspects of artificial intelligence such as
face recognition, quantum computing, satellites. , And space exploration, 5G
telecom, drones, ultra high voltage power transmission. China is really kind of
important to many of the world's major technologies. So, I might ask you, if
you agree that there is a very conscious strategy here among Chinese
policymakers, is the world more sensational? China is running its
standardization process around the world exactly as you describe it, to ensure
that the latest technologies around the world are at least partially or mostly
dependent on Chinese technologies.
It seems to me to be a unique global
center of intention. However, the biggest question is whether the rest of the
world will play ball and let it happen. It is not fully appreciated that we
have seen globalization in the last few decades, it is still quite regionally
organized.
This chart looks at the different economies,
the weight in the world trade system, and the central trade relations. What we
are really looking at are three centers, one focused on Germany, one focused on
China-focused on the United States. On. And if we look at the more complex
types of trade relations, the global value chains where exchanges often cross
the border, it looks even more regional. So I think we're actually going, we're
seeing a further intensification of trade relations at the regional level, but
not necessarily a much deeper trade or trade between the three big people.
Blocks, EU, USA, and China. It is certainly
true that China is putting a great deal of emphasis on expanding its trade and
investment relations with Southeast Asia, about which, I think, it is rapidly
gaining traction in the backyard market. Looks like Also, China is reluctant to
abandon the US market or the European market in any way.
I mean, these are huge drivers of China's
export growth. So we will see how China is chosen about this because it is very
clear that in Europe and the United States, the mood is changing faster and
faster. And I understand the fact that in itself global trade is moving towards
more complex value chains and more services trade and digital trade, which also
reinforces the political hatred to connect with China.
So I think that as long as I say, China will
always be a big part of the global economy, we are probably focusing more on
regional domination rather than being the unique center of a uniform global
economy. I think the scenario that the world divides into three or more
regional trade blocs is not traditional wisdom at the moment. And if the world
were to move in that direction, it would face major obstacles.
There will be protectionism, enrichment of the
supply chain, and many more. However, sitting here in Hong Kong, I can see the
pressure that can result. So I think the important point at the moment is that
unless the European Union, the United States, and China can resolve their
differences, we can see that regionalization of world trade is becoming a
reality over many years.
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