Economic Transition and New Changes in China

At present, China’s economy is facing downward pressure. Meanwhile, China is also in the process of transitioning from high-speed to high-quality development. Economic factors are discharging from traditional growth modes and gathering in the high-quality growth mode. This is an inevitable trend of replacing old growth drivers with new ones.

In 2018, China’s GDP growth rate stood at 6.6 percent, briefly lower than the 6.8 percent of the previous year. In terms of incremental volume, however, China’s GDP reached 90.03 trillion yuan (US$13.43 trillion) in 2018, a surge of 7.95 trillion yuan (US$1.19 trillion) compared with 82.08 trillion yuan (US$12.24 trillion) in 2017. The incremental volume was 7.72 trillion yuan (US$1.15 trillion) in 2017 and 5.45 trillion yuan (US$810 billion) in 2016. It is evident that the annual growth of China’s economic scale has not declined, and the drop in growth rate is due to calculation on a larger basis.

In the context of the international market, it is easier to observe the overall picture of China’s macro-economy. In 2018, for the first time, China’s total foreign trade volume exceeded 30 trillion yuan (US$4.47 trillion), reaching a record high, of which exports grew by 7.1 percent and imports by 12.9 percent. China’s demand showed an obvious upward trend. Import and export volumes between China and its three largest trading partners—the EU, the United States and ASEAN—increased by 7.9 percent, 5.7 percent and 11.2 percent, respectively. Total trade volume between China and countries involved in the Belt and Road Initiative has increased by 13.3 percent, which is 3.6 percentage points higher than the growth rate of China’s total import and export volume. It is apparent that China is optimizing its import and export structural pattern on the global trade map.

Since the outbreak of the international financial crisis in 2008, the main driver of global growth has shifted to emerging markets and developing countries, especially China. Over the years, the contribution rate of China’s economy to global growth has always exceeded 30 percent, ranking first in the world. The proportion of China’s total economic output in the world economy rose from seven percent in 2008 to about 16 percent in 2018. By the middle of this century, China will add at least 300 million more people to its urban population, and the industrial upgrade towards the mid-to-high end will continue. Overall, the global economic center of gravity is shifting to the East. The global value chain will also continue to expand in the East and shrink in the West. The new industrial revolution led by the technological innovation and diffusion of intelligence, network and big data will also be pioneered in China. As the construction of the Belt and Road presses onward and China’s door opens up further to the outside world, China, as the world’s largest market in the long run, will make greater contributions to the world economy.

In the structure of the world economy, China once played the leading role of undertaking international industrial transfer. Today, new changes have taken place. From the perspective of consumption, the country’s 59.58 percent urbanization rate will help promote the upgrade of consumption demand and motivate high-quality development. From the perspective of regional development, the scale effects of economic development of regions such as the Beijing-Tianjin-Hebei region, the Guangdong-Hong Kong-Macao Greater Bay Area, and the Yangtze River Delta are being visualized, and China’s urban space and rural outlook are also being optimized and upgraded rapidly. From the perspective of driving forces, the contribution rate of scientific and technological progress to China’s economic growth went up from 50.9 percent in 2010 to 58.5 percent in 2018. China’s industrial development is now taking advantage of its technological innovation and scale effect to create new competitive advantages.

China’s economic data in 2018 reveals the rapid transformation of an economy with one-fifth of the world’s population, under fast-paced urbanization and economic transition driven by new momentum.

The author is an assistant dean and research fellow at the Chongyang Institute for Financial Studies, Renmin University of China.