China's Economic Development and its Impact on the World during the Past 40-year Reform and Opening-up

By Zhang Jianping,Director of Western Asian and African Studies,the Research Institute of the Ministry of Commerce,and Shen Bo,Economics College,Peking University

The year2018 coincides with the40th anniversary of China's reform and opening-up.In the 40 years from 1978 to 2018,China's social and economic development has undergone tremendous changes.The rapid development of China's economy in the past 4 decades has made the world look askance at it.This miracle of economic development has not only changed the trajectory of China's own development,but also has shown a profound impact on the development of the world economy.At the Boao Forum for Asia on April 10,2018,President Xi Jinping points out in his keynote speech that China will persist in reform and opening-up and continue to adopt a major new policy to expand opening to the outside world,and create a better future for Asia and the world together with all countries in Asia and the world.1To continue opening-up wider to the outside world and actively integrate itself into the world are both China’s inevitable choice and the world's needs for China.Obviously,the economic achievements of China's 40-year reform and opening-up can not be separated from the development of the world economy,while the economic development of China has made its own contributions to the development of the world economy.

The achievements of China's economic development in the 40-year reform andopening-up

First,the sustained and rapid development ofChina's economy

China's economic miracle is based on China's dazzling economic achievements.At the beginning of the reform and opening-up in 1978,China's economic scale is only 367.9 billion yuan RMB,and by 2017,China's gross domestic product(GDP nominal)reaches 82.71 trillion yuan RMB(equivalent to US$12.2 trillion),which becomes the second largest economy in the world,and the proportion of total China's economy accounts for 1.8%of the world economy in 1978,up to 16%in 2017,second only to that of the United States.From the perspective of economic growth,the average annual growth rate of China's GDP nominally is as high as 14.5%from 1978 to 2017,and deducting the annual average rate of inflation of 4.8%,and the annual average growth rate is still up to 9.3%.According to economist Yifu Lin,"such a high rate of sustained growth for such a long period is unseen in human history."2From the perspective of economic structure, the process of China's industrialization is accelerated.The structure of the first industry,the second industry and the third industry is becoming more and more rationalized,and the third industry has gradually been in the leading position and has become the main factor driving China's economic growth.In 2017,the proportion of China's three industries structure was 7.9%,40.5%and 51.6%respectively.The growth rate of the third industry has exceeded that of the first and second industries,

Second,The overall upgrading of social and economic development

From the perspective of economic growth,China's economic growth in the past 40 years is indeed a miracle.However,economic development not only includes indicators of economic growth,but also looks at China's economic development from the perspective of social welfare.From the respect of the per capita GDP level,the per capita GDP of China in 1978 is 381 yuan RMB,which is only 2/3 of Indian per capita GDP in the same period,and then China is a typical low income country in the world.While in 2017,China's per capita GDP reached 59660 yuan RMB(nearly US$8800)and already entered the rank of mediocre level in the world.Obviously,behind the economic growth also the remarkable social development is seen.In the 40-year reform and opening-up,more than 700 million Chinese people are lifted out of poverty.Atar Hossain,a British scholar,pointes out that hundreds of millions of people in China's rural areas get rid of poverty and achieve self-sufficiency in grain,which is a great thing in the history of human development and a great achievement to improve human rights.3From the perspective of the socialliving standard,China's rapid economic growth has made great achievements in the fields of energy,transportation,post and telecommunication,science and education and the basic industry,infrastructure construction and other fields.

Third,green development and sustainable development

Looking at the quality of economic growth,China's economic development in the past 40 years is also commendable.In the past 4 decades,China's rapid economic growth has included different stages of thinking for development.On the whole,China's thinking for economic development is becoming more mature and gradually changing from the initial"GDP-oriented" thinking to sustainable development thinking.At the initial stage of reform and opening-up,constrained by the plight of its national economic development,China's economic development was at an extensive stage of development.As early as 1994,the Nobel Prize Winner and economist Paul Krugman published a paper criticizing the"Soviet style"extensive growth model4of East Asian economies.Many scholars in China agree that China applied a"extensive"growth mode in the early stage of reform and opening-up.With the gradual expansion of China's economic scale,China itself is getting increasingly aware of the importance of transforming its own economic development mode.As early as July 2003,Hu Jintao,then General Secretary of the Central Committee of the CPC, advocated the adherence to the people-oriented,set up a comprehensive,coordinated and sustainable development concept,and promoting the overall development of economy,society and people.At the 19th National Congress of the CPC held in 2017,General Secretary Xi Jinping states clearly"promoting the transformation and upgrading of economic development,building a modernized economic system,and promoting China's economic development onto a new path of high quality and sustainability".Taking carbon emissions reduction as an example,China has reduced nearly 4.1 billion tons of carbon dioxide emissions in the last ten years while China’s economy on the increase,according to the 2017 National Assessment Report on Climate Change.Obviously,China's economic transformation and upgrading of green development and sustainable development have produced initial results.

China's impact on the world economy in the40-year reform and opening-up

First,China's outbound trade and investmentplay a significant role in stimulating globaleconomy.

China's achievements in the 40-year reform and opening-up in the field of economic development are inseparable from the interrelationship and interaction between China and the world market.As a big country feeding nearly 1/5 of the world's population,China's influence on the world economy should not be underestimated.Over the past 4 decades,China has consistently adhered to the basic policy of opening up to the outside world and actively integrated itself into the development process of economic globalization.Against the backdrop of economic globalization increasingly facing significant resistance,China has always been actively promoting bilateral and multilateral trade and investment growth.In 1978,China's import and export trade volume was 35.5 billion yuan RMB,while in 2017,according to the statistics of the General Administration of Customs,the total import and export volume of China's foreign trade reached 27.79 trillion yuan RMB,which is 782.82 times that of 1978.Among them,imports increased from 18.74 billion yuan RMB in 1978 to 15.33 trillion yuan RMB in 2017,and exports increased from 16.76 billion yuan RMB in 1978 to 12.46 trillion yuan RMB in 2017.Statistics show that from 2011 to 2016,the share of China's imports and exports trade in goods and services increased from 8.4%to 9.7%of the world total.Obviously,the rapid development of China's foreign trade has made greater and greater contributions to the prosperity of the international market and international trade.Especially after the outbreak of the global financial crisis in 2008,the growth rate of global trade volume has been in a low position for a long time due to the global economic downturn.The relatively stable growth of China's import and export trade has made a great contribution to the steady growth of global trade.The Annual Report issued by the World Trade Organization(WTO)in April 2018 shows that China's commodity exports continue to occupy the world's first place,accounting for 12.8%of the world's total,while China's commodity imports are the second largest in the world,only next to the United States.Meanwhile,according to the China’s Foreign Direct Investment Statistics Bulletin issued by the Ministry of Commerce in 2017,the scale of China's outbound direct investment in 2016 reached 196.15 billion U.S.dollars,and continuously being the second largest investor in the world,accounting for more than 10%of the global FDI for the first time.In addition,since October 1,2016,the RMB has been formally incorporated into the new currency basket of the International Monetary Fund(IMF)special drawing rights(SDR),thus obtaining the status of the main international currency.With the stable growth of China's economic strength and the continuous enhancement of China's discourse in the global market,China's import and export trade and outbound investment will have more and more impact on the growth of global trade,and increasingly become an important factor in the global economic rebalance.

Second,China's economic transformation and upgrading will provide new experience for world economic development.

In fact,China's contribution to global trade growth is not only reflected in the growing size of its trade volume,but the transformation and upgrading of its economy also has a positive impact on growth of the global economy and trade.The relevant data shows that the annual average contribution rate of China's final consumption to world consumption growth in the period 2013 to 2016 is ranking first in the world.According to the constant dollar price, the annual average contribution rate can reach 23.4%in recent years.Obviously,the Chinese market has increasingly become an important factor for global consumption growth.The World Trade Outlook,published by WTO in April 2018,points out that China's economic structure reform will have a positive impact on Global trade growth.The WTO believes that the transformation of China's economy from investment to consumption in the long run will contribute to China’s stronger sustainable economic growth,thus supporting the sustained growth of the global economy.More importantly,as the largest developing country in the world today,the transformation and upgrading of China's economic development will provide important reference for the development of other developing countries,and provide the developing countries with a development path and a development mode,which are more compatible with the economic development reality of the developing countries,thus giving important support for the sustainable development of the global economy.As Galard,the president of the International Monetary Fund,said that China's economy will be safer and more sustainable through continuous reform and upgrading of the industrial structure,which will benefit the world.5

Third,China is actively participating in global economic development and governance.

With the growing economic strength,China has been actively participating in global economic development and economic governance.Asa Chinese saying goes that"many happy is much better than one man happy",China knows deeply that its economic progress achieved in the 4-decade reform and opening-up is inseparable from the deepening process of globalization as well as sound and stable international order,so it is the policy proposition that China in recent years insists on going global,upgrading the level of opening up to the outside world and upholding mutual benefit and win-win outcomes.As early as 2002,the Report to the 16th National Congress of the CPC put forward the principle of combining"bringing in"and"going global"to comprehensively elevate the level of opening-up to the outside world.Subsequently,the successive Chinese Administrations actively adhere to accelerating the implementation of the"going global"policy.Especially after the global financial crisis in 2008,China has introduced a series of measures in response to the slow recovery of the global economy.On the one hand,China is continuously raising its own level of opening-up to the outside world,actively carrying outthe construction and negotiation of the free trade areas,and promoting the development of bilateral and multilateral trade and investment.On the other hand,targeting the shortage infrastructure construction in many developing countries,China timely puts forward the Belt and Road Initiative to meet their needs.Currently,over the world more than 100 countries and international organizations actively support and participate in the Belt and Road construction,important resolutions by the General Assembly of the United Nations,the UN Security Council and others also give full recognition to the Belt and Road construction program.The Belt and Road Initiative characterized by extensive consultation,joint construction and shared benefits is an important supplement to the current development of the international economic mechanisms.From a long-term perspective,the Belt and Road construction is undoubtedly a win-win program,laying an important foundation for the continuous growth of the global economy.

View correctly China’s economic achievements in the 40-year reform and opening-up

The above-mentioned data indicates that China's achievements in the field of economic development in the past40-year reform and opening-up are unquestionable.However,the outstanding achievements can not completely cover up some shortcomings in China's economic development over the past 4 decades.Therefore,we need to take a correct look at China's economic achievements in the 4-decade reform and opening-up.

Many scholars have studied the achievements of China's economic development over the past 40 years.They generally believe that the key to the rapid development of China's economy lies in China's institutional change that is conducive to the improvement of economic efficiency,and the organic combination of marketization,industrialization and internationalization has promoted the rapid development of China's economy.Particularly,the reform of the traditional economic system has changed the way of resource allocation in China,and has created favorable conditions for the rapid development of China's economy.Some scholars(Zhang Jun,etc.)think that China's economic growth belongs to"transformational growth"from the perspective of transitional economy.6From the perspective of market development,some scholars believe that the rapid growth of China's economy is benefited from the large domestic and foreign market demand.7From the perspective of market supply,many scholars point out that the rapid development and application of technology,the effective transfer and utilization of labor force provide an important guarantee for the sustained growth of China's economy.In addition,the formulation of the Government's development strategy and the implementation of relevant policies have become key factors in China's economic development.I.Larionov,a Russian scholar,having compared the situation between China and Russia,points out that the important reason for the rapid development of China's economy lies in the economic policy and economic reform at the end of the 1970s.8In a word,as the famous economist Jeffrey D.Sachs said that a series of internal and initial conditions in China have promoted China's economic takeoff.9

With rapid development of China's economy in recent years, China's comprehensive national strength has been continuously enhanced.Many Western scholars have acknowledged and accepted the achievements of China's economic development.After comparing China's economic situation before and after the reform and opening-up,Scissors Derek,a researcher with the Asian Research Center,The Heritage Foundation,points out that the reform and opening-up brought the takeoff of the huge dragon-China. S.Athar Hussain,director of the center for Asian Studies at the London School of Economics and Political Science,speaks highly of China’s decades of reform and opening-up that has become another planet.Professor Harro von Senger of the Swiss Institute of Comparative Studies emphasizes clearly that China's policy of reform and opening-up is undoubtedly a correct policy and that its achievements will continue.10The famous Nobel Prize Winner of Economics Ronald H.Coase believes in the book"Changing China"that China's reform and opening-up in 1978 is the most successful economic reform movement in the human history after World War II.11

However,the international community still shows some differences to the achievements of China's development.On the one hand,many people question the sustainable growth of China's economy.For example,American scholar Jonathan Anderson believes that the past"Chinese miracle"is actually similar to the Asian model,driven mainly by investment from high national savings to boost economic growth.12On the other hand,many overseas scholars believe that China's economic rise will be accompanied by the rise of"China's hegemony",and the"China Threat Theory"is undoubtedly a typical one. In 2014 after China-proposed Belt and Road Initiative,some Western scholars and Western media view it as the strategic carrier of China’s version of the"Marshall plan". In addition,many western scholars,from a micro-perspective,point out the thorny problems still existing behind China's social and economic development.For example,Peter Nolan,a famous economist at the University of Cambridge in Britain,points out in his book"China at the Crossroads"that there are many problems and contradictions to be solved in the Chinese development model poverty and inequality,the deterioration of the ecological environment,the potential crisis of the financial domain,challenges to the international relations and the blows and challenges to Chinese enterprises by the global business revolution.13Obviously,the"economic miracle"that China has achieved in the 40-year reform and opening-up is inspirational,but China still needs to solve a lot of problems and contradictions to continue its"economic miracle".

In fact,China has long been aware of the shortcomings of its own development model.The transformation and upgrading of economic development has become the goal of the Chinese Government to work on.As Paul Robert,the Brazil BRICS Policy Research Center,thinks that China's economy is now stepping onto an important stage of transformation and upgrading, paying more attention to long-term and balanced development.14The Report to the 19th National Congress of the CPC has clearly points out that China's economy is in akey period for changing the mode of development,optimizing the economic structure and transforming growth driver.Accordingly,the following six action measures are put forward:Deepening the supply-side structural reform,accelerating the construction of an innovative country;implementing the rural revitalization strategy,and implementing the regional coordinate development strategy; speeding up the improvement of the socialist market economy;and promoting a new pattern of all-round opening-up.At the Boao Forum for Asia Annual Meeting 2018,President Xi Jinping further clarifies the above development requirements.There is no doubt that China's economic development will still have a huge room for improvement in the future.The achievements of China's economic development over the past 40 years indicate that China is moving forward on a correct path of development,but it does not mean that China has found a complete path for development.In order to achieve the goal of rise and realize the Chinese dream,China must continue to explore and solve a lot of structural contradictions and problems emerged in the process of social and economic development.This is precisely the task and challenge faced by the new era of socialism with Chinese characteristics.China needs to correctly view its achievements in the 40-year reform and opening-up,and accelerate the transformation and upgrading of economic development in a new era,so as to make a greater contribution to sustainable development of the world economy.

(Edited excerpts of the article in the Contemporary World,No.5,2018)

Footnotes:

1.President xi Jinping speech at the Boao Forum for AsiaAnnual Meeting 2018,http://www.xinhuanet.com/1018/04/10/c_1122660064.htm.

2.Lin Yifu,“The Past 30-year China’s Economic Achievements May be Rated as a Miracle”,http://finance.qq.com/original/caijingzhiku/lyf__html.

3.Quoting Yang Jinmei,Lu Zengkui and Guo Xingli “China’s Reform and Opening-up in the Eyes of Foreign Scholars”,Beijing Daily,December 29,2008,p.19.

4.Krugman P.,“The Myth of Asia’s Miracle”,foreign Affairs,1994,73(6),pp.62-78.

5.Remodeling and Restructuring,China’s Economy is More Efficient,http://woorld.people.com.cn/n2015/0602/c1002_27090198.html.

6.Zhang Jun,“Remodeling and Growth,Paying Attention to China’s Experience”,Economic observer,Februry 6,2006,p.36.

7.Hai Wen,“China’s Miracle will at least Continue for Another 20 years”,People’s Forum,November 2016,pp.11,13.

8. ,“The secret to China’s Miracle”,Overseas social Science,No.5,1999,pp.25-29.

9.Hu Yongkui,“The Structural Factors in the Reforms in China,Eastern Europe and Former Soviet Union”,Economic Policies,No.4,1994,pp.25-29.

10.The above-mentioned few pieces of data are quoted from Yang Jinhai,Lu Zengkui and Guo Xingli, “China’s Reform and Opening-up in the Eyes of Foreign Scholars”,Beijing Daily,December 29,2008,p.19.

11.Ronald Cooase&Ning Wang,how China Became Capitals,Palgrave,Macmillan,2012.

12.Http://finance.people.com.cn/n/2012/1118/c351703-19613349.html.

13.Nolan p.H.,China At the Crossroads,Journal of Chinese Economics&business studies,2005,3(D),pp1-22.

14.Ibid.