By Li Hong, People’s Daily Online
The global economic crisis has taught everybody a lesson that a country could not and must not rely on others to sustain a long-term boom.
U.S. President Barrack Obama articulated at the April 2 London G20 summit that, from now on, his country, used to be the world’s biggest consumer, will on his watch start to diminish the “twin deficits” – trade and budget debts, and other countries should not be accustomed to looking to Uncle Sam for the sole “growth engine”.
The statement is targeted at an explicit audience, as Obama was asking Germany to ante up government fiscal spending. But other export-oriented economies including Japan and China will also take note of it.
Our policy makers and policy advisers need to take a reckoning, amid a churning worldwide economic downturn, to figure out what a genuine economic "role model" the burgeoning Asian giant wants other developing countries to mimic. I believe it is something other than the once-trumpeted wealth-making pattern of the "Four Asian Tigers," which relied on exports to reach an economic height, and from then on, stagnated.
If Japan had a land expanse as large as India, China or Russia, it would most probably have carved a growth model deviating itself from an export-brought boost. The side-effects of the export-driven model are difficult to avoid. When the United States gets a cough, Japan sneezes.
The onslaught of the global economic crisis, which began on September 15, 2008 when Lehman Brothers went bust on Wall Street, is grisly on China's side, leaving tens of thousands of manufacturing businesses, from toys, shoes, garments, electronics and appliances, shutting doors because others have cut back on their spending. It is reported that legions of migrant workers have become unemployed, many having packed bags on their way back home.
It is righteous for the leadership to think of creating jobs for the sake of maintaining economic growth and social tranquility. One cannot deny the colossal pressure building on Beijing to deliver jobs, as many as 20 million workers are now laid off, with many more underemployed. However, the aging policy of dangling out rebates, or even devaluing the exchange rate of China's currency, the yuan, to make China's goods more inexpensive in the global marketplace, will lead China nowhere.
Although fatter export rebates and a cheaper currency could make the lumbering factories in the coastal provinces regain life, and create low-tech processing jobs on the rusty assembly lines again, it won't change China's image as the world's top manufacturing plant, or "blood and sweat factory," as critics claim. Moreover, it won't bring substantial wealth to the migrant workers and their families in the poor countryside, except maybe a few thousands more dollars and euros in the country's reserve.
On the other hand, a rising number of Americans are complaining that Chinese exports to their shores, though aiding cash-strapped ordinary American families and helping the Federal Reserve maintain a low inflation rate, have added to "American Imbalance" .
The American economy, which contracted by 6.5 percent in the fourth quarter 2008 and is estimated to shrink by the same depth from January to March, is certain to create an expectation among the public of a permanent depression, forcing businesses and consumers there to snap their wallets shut.
It is reported that families on the other side of the Pacific have chosen to save, after two decades of spending freely at will. Thriftiness, long a tradition of our Chinese, will eventually do America and the world good.
China could start to rethink things and take on a new route. It is suggested that the nation should gradually get rid of low-value processing jobs, while creating permanent jobs in building sectors, high-tech and high-value industries, new energies, and in top-caliber service sectors.
Infrastructure in China, including expressways, bullet train lines, undersea tunnels, across-river bridges, inter and intra-city mass transit systems, airports, dams, nuclear power plants, wind mills, apartments and villas, need vigorous input from the government and private investors. This will provide numerous building jobs for the coming 30-50 years. The sector will also maintain China's economy on a consecutive growth of as many years as well, I believe.
Then, Beijing could work out a plan to strengthen and rejuvenate key industrial sectors, such as steel, machinery, petrochemical, automotive, telecom and Internet. Jobs in these high-value areas will be created, and if the time is right, these sectors will make up for the temporary loss of processing jobs and export dollars. More importantly, they will help China gain a solid edge in future competition.
Since becoming Prime Minister in March 2003, Wen Jiabao has spearheaded investing in human resources, establishing tens and hundreds of vocational schools throughout China to teach Chinese rural and urban youth, and arm them with technological know-how. College enrollment has increased two-fold and an increasing amount of overseas talent is being lured to China. All this will pave the way for an economic resurgence after the current economic downturn, mostly incurred by diminishing exports, is over.
Climbing the industrial ladder is not easy, but it is the only way for China to keep our competitiveness and not let down. There are reports that we are investing heavily in electric car, a step in the right direction.
With a strengthened manufacturing base and a bulging wallet, I expect that China will emerge as a sizzling economic engine of the world.
The article represents the author's view only. It does not represent opinions of People's Daily or People's Daily Online.
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