Tuesday, June 25, 2013

China's Economic Lead Doubted

Photo taken in Shanghai, China in 2011.
By Chester B Cabalza

Blogger's Notes:
Commentary of an Academic (Copyright @ 2013 by Chester B Cabalza. All Rights Reserved).

Everybody is watching China’s economy at the moment as the manufacturing activity shrank again in June, according to HSBC, hitting a 9-month low. The index tracks manufacturing activity in China's factories and workshops is a closely watched barometer on the health of the economy. 

The data follows another batch of weak economic indicators last month that showed industrial output, fixed asset investment, exports and imports all weakened. Concerns have grown over the outlook for China's economy, which grew 7.8% in 2012, its worst performance in 13 years.

The World Bank has slashed its growth forecast for China's economy this year to 7.7% from 8.4%, warning of a potential "sharp" slowdown triggered by a fall in investment. The International Monetary Fund on May 29, cut its growth forecast for China in 2013 to "around 7.75%," down from its earlier forecast of 8%, citing a sluggish global recovery which hurt exports.

The main question that may arises is, will China sustain its economic growth ahead against economic woes in the world as Xi Jinping now leads the second largest economy with his vision of the Chinese dream? 
It is still arguably deemed today that China is at the epicenter of Asian development. Prior to its ascent as the world’s darling of investments, China’s success story is also seen as a story of Asian development today. 

As China continues to skyrocket conservatively, shown by apparent socio-economic performances it has projected since 1978, beginning when the world’s plausible economic superpower opened its closed economy. 

China’s multi-faceted picture of social and economic successes can be translated in various prisms of development. The shift of fulcrum in global economy from Anglo-Saxon’s dwindling yet still relevant political power to Asia-Pacific’s influences on major trades are relatively seen nowadays because of China’s resurgence supported by other Asian powers in the continent. 

Comparing China’s condition at the beginning of the twenty-first century with that of a century ago, no one could deny that China has undergone profound changes. The tremendous transformation that has been experienced by China following its economic reform far outweighs that experienced by the Asian Dragons, which renders it necessary to reexamine the relationship between tradition and modernity (Chu-hwa 2010, 28). 

Indeed, China’s bold moves have created a magnificent effect in the process of economic revival, thus absorbing the inflow of capital from all corners of the world which succumbed in the gradual integration of its production and consumption into the global economic system.

With continuous massive development and unprecedented progress, China has used its social and economic turn-around story as a window to simultaneously craft intelligent economic and strategic policies in attracting investments and developments among and within its region.  

As China progresses rapid socio-economic development excellently witnessed by its East Asian neighbors. Prominently written by Jacques (2012, 286), it is in China’s own backyard that the reverberations of its rise are already being felt most dramatically and in the most far-reaching ways. 

If we want to understand China’s rise and what it might mean for the world, then this should be our starting point. The way in which China handles its rise and exercises its growing power in the East Asian region will be a very important indicator of how it is likely to behave as a global power. 

In the case of China, it took a visionary and charismatic leader to turn-around the social and economic developments of China. From Mao Zedong’s political success obtained from Russia’s Leninist Marxist thought to institute communism to Deng Xiaoping’s pragmatic economic brilliance to translate into reality Mao’s socialist ideals. Certainly, Deng Xiaoping worked even harder to promote economic reform.  

China is a microcosm of Asia’s current development. It fluencies the growth of the region’s other national economies through both opening new opportunities and posing new challenges (Tselichtchev and Debroux 2009, 36-37). 

In the study of Wei Longbao’s (2009:12) macroeconomic look at China, by progressively tackling China’s economic vitality and potential in his study, there remains some positivistic and lucrative attitude. 
Since its reform and opening up, China’s economy had kept an average annual growth rate of more than nine percent. During 1998 to 2008, China’s gross domestic growth (GDP) rate has been maintained for more than seven percent, and in several years, even exceeded ten percent. Also by 2008, the market-oriented reform and state-owned enterprise (SOE) reform has shift the focus from strategic issues to practical issues.  

But why the economy is consecutively shrinking now? 

Zhang and Xu (2011) are still worried of spatial inequalities within China, as they deem that, behind China's progressively booming national economy in the last two decades, regional disparity remains a pressing concern. A majority of its regions are lagging behind the national average of per capita GDP, where about 76 percent of a population of over a total population of 1.3 billion live. 

Above all, in can also be construed that, over the last century and a half, efforts to turn China into a cohesive nation and a powerful state have led down many twisting paths. Whether consumerist patriotism can serve as a binding ideology, and how ordinary people are to claim rights as citizens, are not, of course questions that only Chinese face today. 

Another empirical data would suggest that the 2007 China Modernization Report predicts that on the basis of China’s rate of growth between 1980 and 2004, another eight years will pass before it realizes its first stage of modernization. This means that by 2015 China will have modernized to the level of developed nations in 1960. By 2005 China had realized 87 percent of its goals for the first stage of modernization, one percentage point higher than the previous year (Mahbubani 2008, 22). 

Fast forward today, Asian development can also be felt based from the achievements of two of its developing giant yet getting richer countries (China and India) with emerging markets on one side like Turkey, Indonesia, and the Philippines (TIP).  

Asia’s future luster as an economic superpower, despite its mixture of developing and developed economies prove that it remains bullish and dynamic as shown in the rapid social and economic performances of China and other Asian economies in the region.  

Remember that it only took 10 years for this dragon power to double its economic power, besting the two Atlantic superpowers as Britain developed for 58 years while its successor United States progressed for 47 years. China speedily developed than Japan which built-up its economy for 33 years. Obviously, China defied all the odds and gauged its power as the world’s factory.  

With continuous massive development and unprecedented progress, China has used its social and economic turn-around story as a window to simultaneously craft its intelligent economic and strategic policies in attracting investments and developments among and within its region. 

Ultimately, the pillars of Chinese development will always have a bearing on the Chinese approach as well illustrated by Deng’s comment: ‘Observe developments soberly, maintain our position, meet challenges calmly, hide our capacities and bide our time, remain free of ambition, never claim leadership’ (Jacques 2012, 361).

1 comment:

Anonymous said...

Is China's economy just for a show? The communist party in China now is feeling the shock and nervousness. I hope they recover ASAP. Will they really dominate the economy in 2016 and beyond?