The global economy is in a period of profound change. Protectionism and unilateralism are resurgent, economic cooperation faces headwinds and multilateralism and the free trade system are increasingly challenged. As the world’s second largest economy, China is constantly in the spotlight.
There are legitimate concerns that China’s economy is no longer able to maintain its speed, which could impact on countries such as New Zealand. What are the prospects for China’s economy looking forward? This article aims to address this question. To do this however, some historical reflection is necessary.
This year marks the 40th anniversary of China’s reform and opening-up. Over the past four decades, great strides have been made in China’s economic and social development. Since the implementation of the reform and opening-up process in 1978, GDP has averaged an annual growth rate of around 9.5 per cent in comparable prices and its foreign trade has registered annual growth of 14.5 per cent.
For everyday Chinese, this has meant emerging from a life of shortages and poverty to one where many can enjoy a moderately prosperous life. According to current UN standards, more than 700 million Chinese people have been lifted out of poverty, accounting for more than 70 per cent of the global total over the same period.
China follows a people-centred development philosophy and a development vision that features innovative, coordinated, green and open development for the benefit of all. At present, China’s economy is in transition from a phase of rapid growth to a stage of high-quality development.
China will continue to put emphasis on the quality rather than speed of growth, and on more comprehensive and coordinated development rather than narrowly defined economic growth, on the real and tangible benefits people get, rather than just aggregate growth rate. To borrow the well-known Māori proverb that ponders the most important thing in the world: He Tangata, He Tangata, He Tangata. It’s people. It’s people. It’s people.
New forms of consumption, such as sustainable consumer behaviour and information consumption, are growing rapidly in China, helping drive strong GDP growth of 6.5-6.7 per cent in 2018. Looking at the main economic indicators such as job creation, consumer prices, government revenue and productivity, China’s economy is clearly performing well by global standards.
At the same time, China’s economy is affected by changes in the global economic and trade environment, which can make it difficult to maintain stability. Nevertheless, China boasts a solid material and technological foundation, a fairly complete industrial system, and broad space for continued urban-rural and regional development.
It also enjoys strong market demand as a result of economic restructuring, an increasingly competent and skilled human resource base, a vibrant entrepreneurial ecosystem, and a reserve of innovative measures and policy tools for macro regulation. Given all these factors, there are enough reasons to be confident about China’s economy.
At the recent Bo’ao Forum for Asia and the China International Import Expo in Shanghai, President Xi Jinping reiterated China’s commitment to opening-up by significantly expanding market access, protecting intellectual property rights, and making the investment and business environment more attractive. Greater openness is fundamental to building on the high-quality development China has undergone over the past 40 years.
Alongside its own steady economic development, China’s growth has contributed greatly to growth and development in other countries.
For many years, China has accounted for more than a third of total global economic growth. Looking ahead, China is focused on building a platform for open and inclusive cooperation between countries in the form of the Belt and Road Initiative, currently supported by more than 140 countries and international organisations.
Over the past five years, China’s trade with Belt and Road countries has exceeded $5 trillion and outward direct investment has amounted to over $60 billion, creating more than 200,000 local jobs. In the coming 15 years, China’s import of goods and services is expected to exceed US$30 trillion and US$10 trillion respectively. Through the Belt and Road, China will remain a strong advocate of openness at the global level, and will continue to act as an engine of global growth and an active supporter of global governance reform.
What does this mean for New Zealand specifically? In many areas, China and New Zealand have comparative advantages that complement each other. New Zealand is a leader in clean and renewable energy, an area of great interest to China. New Zealand also has a strong capability in science research and innovation, and real scope exists for China to collaborate with New Zealand in these fields.
It’s fair to say that with the ongoing development of China’s economy, more benefits can be obtained by New Zealand and the future of China-New Zealand relations will remain strong.
China has always attached great importance to its relations with New Zealand. Looking toward our shared future – greener, more open and more innovative, China stands ready to work with New Zealand on the basis of common goals and shared interests, for the benefit of both our countries, and all our people.