What China's economic transition mean to the world
- By Zhang Yugui
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E-mail China.org.cn, March 30, 2016
However, the Chinese decision makers should learn the lesson of the Japanese economy's bubble burst. It provides us a window to observe how a developed economy missed an opportunity to catch up with the U.S. on its road to the top position of the international division of labor when risks blew up both in its internal and external economic systems.
If China -- the world's second largest economy with a total volume of US$10 trillion -- can realize its strategic restructuring in industrialization, it will provide a valuable paradigm for economics, the rebalance of the global economy and the evolution of global economic pattern.
First, China's economic transition is valuable for economics. In recent years, Western mainstream economists such as Nobel laureates Joseph Stiglitz and Edmund Phelps have researched the mechanism of China's economic transition as China's international influence grows. Meanwhile, global top-notch think tanks such as the Peterson Institute for International Economics and the Brookings Institution are also intensely focused on this issue. China's transition and development is not only a new proposition to economics, but also provides economists an important sample for their study on developing countries.
Second, China's economic transition will not only provide a new engine for global economic recovery, but also contribute a growth dividend for regional and neighboring countries, especially for the countries along the "Belt and Road" initiative. On the one hand, with the driving force of supply-side structural reform and trade facilitation measures, such as the ongoing negotiations with the U.S. on the bilateral investment treaty, China's high-quality production capacity will go out more easily than before. On the other hand, China's huge market scale and purchasing power will provide new market opportunities for its trade partners.
Thirdly, China's economic transition will input a new dynamic for reforming global economic governance. At present, global financial public goods such as the IMF and the World Bank supply failed to meet demands due to the relative decline of the economic strength of developed countries. Moreover, the acceleration of globalization, the rise of Internet finance, the frequent regional financial crises, the lack of coordination mechanisms for regional or global economies and the developing countries' growing demand for investment in particular have worsened the imbalance between supply and demand. If China can successfully achieve its goal of economic transition, the prosperous and vital country will no doubt play an important role in the mechanism design and capacity building of global financial public goods.
Professor Zhang Yugui is dean of the School of Economics and Finance at Shanghai International Studies University.
This article was first published in Chinese and translated by Li Shen.
Opinion articles reflect the views of their authors only, not necessarily those of China.org.cn.
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