The next five years will see one of the greatest transformations in the structure of the world economy in history. On the projections of the IMF, China will achieve its own domestic target of ‘moderate prosperity’ by 2020, and by 2021-22 will enter the ranks of ‘high income’ economies by World Bank classification.
To understand the implications of this, it may be noted that by World Bank criteria, only 16% of the world’s population currently lives in high income economies, whereas China is almost 19% of the world’s population. The effect of this change on other countries and companies will be magnified by China’s strategy being consciously based on ‘opening up’. This is set out in numerous speeches by President Xi Jinping and is currently practically embodied in major practical initiatives such as November’s China International Import Expo to be held in Shanghai.
China’s ‘opening up’ strategy means that the consequences of changes in China’s domestic economy will be transmitted to all countries. In particular, a key consequence is that the pattern of both consumption and production in a high-income economy is sharply different to that of a low income one. China characterizes this shift domestically as one to ‘high quality’ growth.
The IMF projects that during the coming six years China’s growth will greatly exceed any other economic centre. More precisely, the IMF projects that from 2017 to 2023:
China’s economy will grow by $9.6 trillion. This compares to a $7.0 trillion increase for the EU, $5.1 trillion for the US, $2.1 trillion for India, and $1.1 trillion for Japan. China’s economic growth will therefore be almost 40% larger than any other economic centre.
But the specific impact of a shift to ‘high quality growth’ on the structure of China’s development and world markets is that the IMF projects China’s per capita GDP will rise by almost 40% in 2017-2023 and in current dollar prices by 76%. By current World Bank criteria, China will enter the category of high income economies in 2021.
The change in the consumption patterns that will follow from these changes are known from international experience. While the total percentage of household income spent on foodstuffs will fall the percentage expenditure on high quality food – meat, dairy products, fruits etc – will rise. Consumption of high quality consumer durables – automobiles, smart phones, electronic devices etc – will rise sharply. An increasing percentage of income will be spent on services – entertainment, restaurants, tourism, health etc. Demands for environmental protection and improvement will rise sharply.
Simultaneously with these sharp shift in consumption, the pattern of China’s production will also change. The share of labour intensive economic sectors will fall, while the share of technology intensive ones will rise sharply – rise of internet retailing, the integration of the internet with production, the role of artificial intelligence, the use of robots etc.
Taken together these simultaneous change in both production and consumption are characterized by China as the transition to ‘high quality growth’. A first example of the impact this high quality growth will have on foreign countries and companies can be taken from China’s increasing expenditure on imports of high quality food products. Taking recent data to show the trend, during the first two months of 2018 China’s imports of fresh fruit increased by 58%, compared to the same period in 2017. The increases were particularly concentrated among high quality fruits - cherries, oranges, blueberries, and bananas. US cherry shipments to China have almost tripled since 2012 to reach nearly three million boxes. Ten years ago China only imported one million boxes of Chilean cherries, but that has risen to 30 million. Given such import growth rates, US farmers clearly have a great interest in the recent ‘Joint Statement of the United States and China Regarding Trade Consultations’ issued during Chinese Vice Premier Liu He’s visit to Washington which noted:‘Both sides agreed on meaningful increases in United States agriculture… exports.’
If the number of countries able to take advantage of China’s rapidly growing market for high quality food may appear limited by geographical or climatic factors, a further huge example can be taken from one of the world’s largest and most geographically spread sectors – tourism. It is a universal trend that as countries achieve higher incomes, their populations spend a higher proportion of their income on key service sectors such as entertainment, visits and tourism. Tourism is a key feature of a high-quality living standard.
China has encouraged this trend both domestically and internationally. The international impact of this aspect of China’s shift to high quality growth is of great interest to numerous countries as international visits by Chinese tourists are, in economic terms, an import by China and an export by countries receiving the visitors. China in the last 10 years has transformed the international tourism industry. Ten years ago, China accounted for only three percent of international tourism. By 2016, it accounted for 20%. A decade ago, total international expenditure by Chinese tourists was less than $40 billion – under half that spent by US tourists. By 2016, China’s international tourist expenditure was $260 billion, more than twice the US. By 2020 it is estimate there will be 200 million international Chinese tourists.
Going beyond these specific examples, to grasp the full impact of China’s ‘opening up’ and shift to ‘high quality growth’, it is necessary to understand why China’s impact on world markets for key products and services will be even greater than is indicated by GDP data calculated by current prices. This results from the fact that it is well known in economics that measurements at current exchange rates significantly distorts the actual number of goods and services sold in developing countries. This is caused by the fact that the lower wages than in advanced economies in most economic sectors of developing economies, not only in production but also in distribution and retailing, mean that, due to these lower costs, products and services can be sold profitably at significantly lower prices in developing countries than in advanced ones.
The branch of economics which analyses this is known as the study of purchasing power parities (PPPs). This focuses on the actual volume of goods and services in the economy. By this measure, while in 2017 China’s GDP was 38% lower than the US at current exchange rates, the IMF calculates that the actual volume of goods and services in China’s market the same year was already 19% higher than the US and by 2023 the IMF projects the volume of goods and services in China’s economy will be 50% bigger than in the US.
This helps explains why sales of many key products are hugely larger in China than in any other country. For example in 2017 there were 717 million smart phone users in China - compared to 300 million in India and 226 million in the US. A similar dynamic is occurring in motor vehicles. By 2016, motor vehicle production in China, at 28.1 million, was larger than the combined total of the US (12.2 million), Japan (9.2 million), and Germany (6.1 million). In 2017 China’s car and commercial vehicle sales reached 28.9 million. In addition to production in China by foreign companies, China recently announced import tariffs on foreign cars would be reduced to 15%, from 25%, and tariffs on auto parts will be cut to 6%.
Another key sector to benefit from China’s shift to high-quality growth specifically affects advanced economies. Despite China’s economic growth being the fastest in a major economy in human history, China started from an extremely low point – in 1949, devastated by a century of foreign intervention and war, China had almost the world’s lowest per capita GDP. By 2017, measured in PPPs, which are the best measure of international comparisons in productivity, China’s per capita GDP was still only 28% of the US, 33% of Germany, 39% of Japan and 42% of South Korea. Oxford Economics noted in its study ‘Understanding the US-China Trade Relationship’ that countries with the biggest increase in openness with China (the sum of exports and imports as a share of GDP) had the highest growth since 2001. Comparing other economies to the US, the study noted that those economies that are closer in proximity to China (Singapore, South Korea) or are major exporters to China (Australia, New Zealand, Canada) have grown most rapidly. To this it may be added that Germany, which has seen China emerge as its largest trading partner, has since 2000 exceeded US growth rates in per capita GDP terms.
The conclusions from the above trends are clear. The international impact of China’s shift to high quality growth will affect almost every country. The world is used to China being the dominant market in sectors such as commodities. Now China increasingly will become the world’s dominant market in higher quality consumer and producer goods and services. China’s development of high quality production and consumption, and the enormous opportunities for trade and investment it creates, mean China’s aim of raising the living standards of its people to a new level coincides with the interests of other countries – a ‘win-win’ outcome not only in words but in economic reality.
(John Ross, senior fellow of Chongyang Institute for Financial Studies, Renmin University of China.)
责编：介瑾
赞
踩
路过
