The world economy has been undergoing profound changes in recent years. The momentum of major economies such as Europe, the United States, and Japan is slowing, while new economies like Brazil and Russia are still in the shadow of economic recession. India has witnessed dramatic economic growth but the south Asian nation is still not a major global driving force considering its economic scale. At the same time, China, the world’s second largest economy, with its further opening-up and integration with the globe, accounted for more than 30 percent of global economic growth, making it the most significant driving force.
Stable Chinese economic growth major driving force in global recovery
Since opening-up 30 years ago, China’s economy has become more and more important to the world economy. According to World Bank data, China’s GDP rose from 1.2 percent of the world’s GDP in 1979 to 9.3 percent in 2010. That figure rose to 11.9 percent in 2015 with an average growth of 0.5 percent during the 12th Five-Year Plan period. China makes up 14.8 percent of the world’s economy, behind the United States which accounts for almost a quarter. Japan and India represent 5.6 percent, and 2.8 percent of the world’s economy respectively.
During the 12th Five-Year Plan period, China accounted for more than 30 per cent of the world’s economic growth, the biggest contributor. In 2016, China continued to grow strongly. According to international estimates, the economic growth rate of China, the United States, and Japan was 6.7 percent, 1.6 percent, and 0.6 percent respectively.
Increasing Chinese demand boosts world trade and economy
In recent years, China has been playing a more important role in world trade. According to the United Nations Conference and Trade Development, 10.3 per cent of exports came from China in 2010. That rose to 13.7 percent in 2015. At the same time, China accounted for 9.1 percent of imports in 2010 and 10.1 percent in 2015.
The market demand in China remained strong even in a sluggish world economy in 2016. From January to November, China’s imports of iron ore, cooper ore, and crude oil grew 9.2 percent, 30.5 percent, and 14 percent respectively. In addition, imports of integrated circuit, pharmaceuticals, and auto components increased 9.3 percent, 9.1 percent, and 8.3 percent respectively.
At the same time, China is also providing cheap and high-quality industrial products to the world, lowering global production costs and promoting technological improvement.
China’s outbound investments spur world economy
With a strengthening economy, technological development and the promotion of the Belt and Road Initiative, China’s outbound investment and economic cooperation has rapidly grown. According to the United Nations Conference and Trade Development, the proportion of all foreign direct investment made by China rose to 8.7 percent, a big leap forward from 0.1 percent in 2000.
From January to November last year, China’s non-financial investments abroad amounted to 1.07 trillion yuan ($161.7 billion). Contracts for engineering construction in foreign countries reached 1.27 trillion yuan ($192.5 billion), 52.1 percent of which were in 61 countries involved in the Belt and Road Initiative.
Huge Chinese economic potential continues to drive the world economy
The fundamentals of the Chinese economy remain solid. As the world’s largest developing country, China has a long way to go in terms of industrialization, urbanization, and agricultural modernization. But the potential of the Chinese economy is huge considering its 900 million-strong labor force, of which 100 million received higher education and professional training, and effective supply-side structural reform in major sectors.
The upgrades of China’s domestic demands provide a broad market to the world. During the 13th Five-Year Plan period, China is likely to raise its per capita GDP about 30 percent and help all people get out of poverty. In addition, high-income people will account for 20 percent of the urban population with $10,000 disposable income. Such a tremendous purchasing power would bring prosperity to any market in the world.
To sum up, as the world’s number one in terms of population, China’s major contribution to the world has been reducing poverty by more than 700 million people and developing itself into a medium-to-high income nation. The scale and momentum of China’s industrialization and urbanization are unprecedented and China will continue to be a major force driving the world economy.