China's Contribution to World Economy

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Last updated at: (Beijing Time) Monday, March 31, 2003

China's Contribution to World Economy

Along with economic globalization and the development of China's export-oriented economy, China's close ties with the world economy have become an important factor for academic research and economic decision-making.

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Editor's Notes: Along with economic globalization and the development of China's export-oriented economy, China's close ties with the world economy have become an important factor for academic research and economic decision-making. This article and two others published in today's People's Daily mainly discuss questions, such as the interaction of China and the world in the aspects of economic growth, the deep-seated reasons for the slump of the world economy and the regional cooperation of East Asia. We hope they will be of help to readers in understanding the interaction between China and the world economy.

At present, the world economy is faced with increasing factors of uncertainties and slow economic recovery, the vigorous, sustained and rapid growth of China's economy has become a flash point in world economic development and has received close attention from the international community. The UN "World Economic Situation and Prospects for2003" published its comments, saying that China has become the "locomotive" for Asian economic growth. This saying may not be very exact, it nevertheless indicates that China is making ever-greater contributions to the world economy.

China's rapid economic growth has made important contribution to the development and prosperity of the world economy, especially to the world economic stability and recovery in recent years. Over the past 20-odd years of reform and opening up, China has witnessed sustained, rapid economic growth, with the average annual growth rate of GDP in the 1978-2001 period reaching 9.3 percent, 8 percent in 2002 and the total GDP volume exceeding 10 trillion yuan. Along with rapid economic development, China's impoverished population (population with daily living cost less than one US dollar) has decreased by 147 million, accounting for 84.5 percent of the total volume of reduction in the poverty-stricken population of the East Asian region. China's absolute impoverished population has also decreased to around 30 million. Poverty has always been a difficult problem plaguing various countries around the world, it has seriously affected the stability and sustainable development of the world economy. As a large developing country, China has enjoyed sustained, rapid economic development, provided constantly improving living standards for its people, thus making important contributions to the sustainable development and prosperity of humankind.

World Bank once made an estimate of China's contribution rate, the rate of China's contribution to world economic growth, calculated in accordance with the parity of purchasing power in the 1980-2000 period was 14 percent, lower than the 20.7 percent rate of the United States and 7 percent higher than that of Japan. In the same period, China's rate of contribution to global trade growth ranked among the world top three, reaching 4.7 percent, lower only than the US rate of 14.4 percent and Japan's 6.9 percent. According to Morgan Stanley's latest estimate, China's contribution rate to the world economy jumped to 17.5 percent in 2002.

China has become the globe's most attractive commodity market. China had remained only as a huge "potential market" for a long time, but now, along with the sustained, rapid economic development, China has become the most vigorous "actual market" in the world. Chinese products have kept moving to the world, while large quantities of foreign products have also been pouring into China. In the 1990-2001 period, when the global export growth rate was 6.3 percent on average, China's reached 14.9 percent; and while global import growth rate was 6.5 percent China's stood at 15.5 percent, both obviously higher than the average global level. China's good and cheap exported commodities have not only benefited numerous consumers worldwide, American consumers alone can save expenditures of nearly US$15 billion annually, but have also enabled foreign companies purchasing in China to reduce their production cost and enhance their products' international competitiveness. China's rapidly growing import has created numerous job opportunities for the world. The tremendous development of China's foreign trade has propelled the global free flow and optimized allocation of resources.

China has become the most favored investment place in the world. At present, the world economy is in the doldrums and developed countries witness huge amounts of overproduction and funds. China's high-speed economic growth, vast domestic market and improving investment environment have generated enormous attractive power for transnational corporations that are seeking a way out. They are vying with each other to invest and settle down in various parts of China in order to have a share of the fruits of China's fast economic development. In 2002, China absorbed direct overseas investment to the tune of over US$50 billion, ranking first in the world. According to a "Fortune" magazine report, by 2001, over 80 percent of the world's 500 top companies had invested in China, with more than 2,000 investment projects. What is worthy of note is that Chinese firms are also going global, making investments and setting up factories in various parts of the world, despite of their current small number, they have made contributions to local economic development.

China has become an important force promoting Asian economic cooperation and spurring East Asian economic recovery. Since the 1990s, Japan's bubble economy has burst and its economic development has long been in a state of stagnation, so its motivation of East Asian economic growth has weakened. During the Asian financial crisis in 1997, the East Asian economy sustained serious impacts. Taking the stand and action of a large responsible country, China strengthened cooperation with East Asian countries and regions and helped them out of the predicament. China's relatively rapid economic growth has provided them with a colossal export market and boosted East Asia's economic recovery. Statistics show that the growth of main Southeast Asian countries' exports to China in the 1990-2000 period exceeded 100 percent. In 2000, the Republic of Korea's (ROK) favorable balance of trade with China reached US$12 billion, that of ASEAN surpassed US$5 billion and that of China's Taiwan hit US$20 billion. China is not only the main source of trade surplus for East Asian countries and regions, but also is an important destination for their overseas investments. In 2002, China replaced the United States to become the largest object for the overseas investments made by the ROK and Japan.

Besides, the correct macro-control policies, such as the policy on expanding domestic demand, proactive fiscal policy and a stable monetary policy in its relatively rapid economic growth, have provided valuable experiences for the world, especially some developing countries, it has also exerted a promotional role in deepening the development of the studies of economics.

Since China is still a developing country, its contribution to and influence on the world economy are still limited. People's praise of China as the "engine" and "locomotive" for regional economies can only serve as a driving force spurring the Chinese people to make more strenuous efforts.

By People's Daily Online

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