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China consolidates role as stabilizer of world economy

Author  :  Mei Xinyu     Source  :    Chinese Social Sciences Today     2017-04-27

The Chinese economy is off to a good start in the first quarter of 2017, with GDP growing 6.9 percent year-on-year, the National Bureau of Statistics announced on April 17. From the perspective of the world economy as a whole, the domestic economy’s performance, which exceeded forecasts, indicates that China has cemented its role as the stabilizer and engine of the global economy.

China began to serve as a stabilizing force in the East Asian economy in the 1980s. After a financial crisis hit the region in 1997, its role in providing stability there became increasingly evident.

According to the International Monetary Fund and the People’s Bank of China, China’s variation coefficient of annual GDP growth from 1980 to 2001 was 0.35, the lowest among East Asian economies.

Excluding China and Japan, the coefficient for the other East Asian economies stood at 0.49. If China is factored in, the coefficient would decrease to 0.29 and if Japan joins the rank, the figure would rise to 0.38.

In the new century, the influence of China’s economy has radiated to the world. During the 10th and 11th Five-Year Plan periods, China’s contribution to the global economy accounted for approximately 14.2 percent annually on average. During the 12th Five-Year Plan period, the rate, calculated at the constant dollar price of 2010, jumped to 30.5 percent, making China the largest contributor to the world economy, while the rates for the United States and the euro zone were 17.8 and 4.4 percent, respectively.

In 2016, China held on to the top spot, contributing 33.2 percent to the world economy if calculated at the constant dollar price of 2010 and 41.3 percent if based on the 2015 price. The United States’ contribution accounted for 16.3 percent and Japan for 1.4 percent.

China’s economic growth has been the decisive factor in the radical change in the distribution pattern of contribution made by countries to global growth. According to the World Economic Outlook released by the IMF, the contribution of developed economies to global growth accounted for more than 80 percent from 1976 to 1979, but it fell to 70 percent in the 1980s, to 60 percent in the 1990s and to 45 percent in the first decade of the 21st century.

From 2010 to 2015, the rate continued to fall and was reduced to 30 percent, while the contribution of emerging and developing economies rose to 70 percent. The distribution pattern was turned upside down compared to the situation in the 1980s. Were it not for China’s rapid growth, the dramatic change would not have happened.

China’s trade partners have also enjoyed the fruits of the country’s economic boom as it further opens its markets while promoting export growth. In 2004, China overtook Japan as the third-largest exporter in the world, next only to the United States and the 25-nation European Union. A few years later, it replaced the European Union and is now closing in on the United States.

In the first quarter of 2017, the growth of imports reached 31.1 percent, 16.3 percentage points higher than export growth. Moreover, China’s oil consumption continues to grow.

Many market participants predicted that the Chinese economy will maintain the status as the stabilizer and engine of the world economy in the foreseeable future. Its performance in the first quarter of 2017 has affirmed this viewpoint.

 

This article was translated from People’s Daily Overseas Edition. Mei Xinyu is a research fellow from the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

Editor: Yu Hui

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