Despite the downward pressure, China's economic growth rate is expected to be about 6.5 percent this year and it will continue to benefit the world.
PHOTO｜LUO JIE / CHINA DAILY
By Hu Angang | CHINA DAILY | 02/14/2019 page13
The author is dean of the Institute for Contemporary China Studies and professor of School of Public Policy and Management at Tsinghua University.
How will China handle its economic growth at the beginning of 2019? This is a question that has caught the attention of the whole world.
Recently, the annual report Global Economic Prospects released by the World Bank predicted that the growth of the world's second-largest economy is likely to slow to 6.2 percent this year.
The World Bank's previous forecasts of China's economic growth rate have been conservative, with predictions that turned out to be slightly lower than the actual outcomes. And the report pointed out that 6 percent would still be a fairly strong growth rate for China.
The report also projected that global economic growth would soften from 3.1 percent in 2018 to 2.9 percent in 2019, 3.3 percentage points lower than the Chinese economic performance.As a matter of fact, from 2010 to 2017, the average global GDP annual growth rate was 2.8 percent, which means that 2.9 percent is not all that disappointing.
Considering this, it is better understood that the external environment for China's economic development is similar to that of the past seven to eight years, although the average annual growth rate of China's GDP was as high as 7.6 percent during this period, 4.8 percentage points higher than the world's year-on-year growth rate. And the Chinese economy contributed about one-third of global growth in this period.
Therefore, how to understand the downward pressure on the Chinese economy?
China has experienced rapid economic growth for over 30 years. Specifically, China recorded an average annual growth rate of 9.9 percent from 1978 to 2011. Since 2012, China's macroeconomic policy has shifted to "making progress while maintaining stability" and it has continuously lowered its targeted economic growth rate.
The targeted growth has steadily dropped from around 7.5 percent in 2013 to around 6.5 percent in 2018, while the actual growth has fallen from 7.8 percent in 2013 to 6.6 percent in 2018.
Generally speaking, China's economy has maintained overall stability and has remained in line with expectations.
Although it is expected that China will double its 2010 GDP by 2020, the nation's economy has shifted from the stage of high-speed growth to the stage of high-quality development.
So what are the basic conditions and main advantages of China's economic development this year?
First of all, China's domestic savings rate is among the highest in the world.
According to World Bank data, China's domestic savings rate reached 46.2 percent in 2016, far above the world average of 24.7 percent, and 1.52 times that of the United States.
Second, China boasts a modern and comprehensive industrial system that is opening more widely to the world. At the current stage, China stills acts as the world's factory, ranking first in manufacturing, but, at the same time, it is rising to be the world's second-largest importer.
Next, China's domestic market is huge and growing faster than ever. At present, China is the world's largest market entity, with more than 100 million participants. And the labor resources reach 787 million, accounting for 22.8 percent of the world's total.
In addition, the total amount of professional personnel in China has reached 170 million,including more than 42 million engineering and technical personnel, 6.2 million research and development personnel, and more than 3 million returned overseas students, forming a new competitive edge with its talent pool.
Last but not least, China's scientific and technological innovation advantages are becoming more and more prominent, the number of patent applications filed by domestic residents accounted for 56.6 percent of the world's total, the number of domestic trademark applications accounted for 48.3 percent and its high-tech exports accounted for more than one-third of the world's total.
In conclusion, we have full confidence that China's economic fundamentals are poised to continue evolving in a positive way, at least in the long run.
Even if China's economic growth rate is around 6.5 percent this year, it will still rank among the fastest for the major economies and be equivalent to twice the world economic growth rate, and still act as the biggest driver for global economic growth, contributing about one-third.
For the world, China can drive global economic growth through maintaining a medium-to-high rate of growth, or promoting trade growth, especially in the field of imports.
In 2018, China's imports of goods exceeded $2 trillion for the first time. In 2019, with the expansion of domestic demand, especially China's initiative to expand imports, and further reduce institutional import costs, China is bound to significantly increase the proportion of imports of high-quality products and services.
It is expected that China's imports of goods will exceed $2.2 trillion, accounting for more than 10 percent of the world's total.
When China becomes one of the world's largest importers, it will not only bring benefits to Chinese consumers, but also create more business opportunities for producers across the globe.
As President Xi Jinping said at the United Nations Office at Geneva in 2017:"China will do well only when the world does well, and vice versa."