CHINA’S DEVELOPMENT ACHIEVEMENTS IN FOUR DECADES OF REFORM AND OPENING-UP AND THEIR WORLD EFFECTS

ZHANG JIANPING & SHEN BO

The fi rst author is Director of Center for Regional Economic Studies and Director of Institute of West-Asian and African Studies, Chinese Academy of Trade and Economic Cooperation and the second author is associated with School of Economics, Peking University

The year of 2018 marks the 40th anniversary of China’s reform and opening-up. Over the past forty years, China’s rapid economic development has astounded the world.Not only has the economic development miracle changed the track of China’s own development, it also carries profound and far-reaching effects on world economic development at large.

On April 10, 2018, President Xi Jinping made a keynote speech at the Boao Forum for Asia Annual Conference, in which he made it clear that China will unswervingly persevere with reform and opening-up, continue to launch landmark measures to broaden market access and work together with various countries of Asia and the world at large towards a better tomorrow for Asia and the world.

Continuing to expand opening-up to the outside world and being active in integrating with the world is not only a necessary choice of contemporary China but also what the world demands China to do. China’s economic achievements in the four decades of reform and opening-up cannot be separated from world economic development and likewise China’s economic development has contributed to that of the world.

CHINA’S ACHIEVEMENTS IN FOUR DECADES OF REFORM AND OPENING-UP

1. Chinese Economy Enjoys Sustained Rapid Development

China’s economic miracle is built on the basis of glaring economic development results of the country. In terms of quantitative scale, at the outset of reform and opening-up, the size of Chinese economy was merely RMB367.9 billion whereas by 2017, China’s GDP (nominal)was as much as RMB82.71 trillion (equivalent to US$12.2 trillion), the country having become the world’s second largest economy. The proportion of total Chinese economy in the world total rose from 1.8 percent in 1978 to 16 percent in 2017, second only to the United States.In terms of growth rate, between 1978 and 2017, China’s GDP averaged a nominal annual growth rate of 14.5 percent and in deduction of an annual inflation rate of 4.8 percent on the average it still arrived at an actual growth rate of 9.3 percent. In terms of economic structure,the process of China’s industrialization has quickened, structure of primary, secondary and tertiary industries becoming increasingly more rational with tertiary industry gradually becoming predominant. In 2017, the structural proportions of primary, secondary and tertiary industries were respectively 7.9 percent, 40.5 percent and 51.6 percent. The increase on tertiary industry has surpassed that of primary and secondary industries,becoming a principal driving force for China’s economic growth.

2. Level of Overall Socio-Economic Is On the Rise

In terms of economic growth, China economic growth of the past forty years deserves to be called a great miracle.In 1978, China’s per capita GDP was RMB381, merely two thirds of that of India in the same year, China then being a typical low-income country in the world. By 2017, the figure reached RMB59660 (about US$8800), the country joining the ranks of upper-middleincome countries. In term of social living conditions, China’s rapid economic growth has enabled the country to make splendid achievements in such basic industries as energy, communication and transport, postal services and telecommunication, science and technology, and culture and healthcare and infrastructure development. In four decades of reform and opening-up, over 700 million Chinese have rid poverty.

On April 10, Chinese president Xi Jinping attended the opening ceremony of Boao Forum for Asia Annual Conference 2018 and delivered a keynote speech entitled“Openness for Greater Prosperity, Innovation for a Better Future”. (Photo source: Xinhua News Agency)

3. Green Development and Sustainable Development

In terms of quality of economic development, China’s economic development in the four decades of reform and opening-up is also noteworthy. In the past forty years, China’s thinking on economic development has become more and more mature, gradually transitioning from that of “GDP above all” to begin with to that of sustainable development. At the advent of reform and opening-up, constrained by its development dilemma, China’s economic development was at a stage of extensive development. As its economic scale gradually enlarged, China increasingly came to see the importance of changing its mode of economic development.

In July 2003, then CPC General Secretary Hu Jintao called for “putting people first, establishing an outlook for allround, coordinated and sustainable development and promoting a full socioeconomic and human development”.At the 19th CPC National Congress,General Secretary Xi Jinping made it clear to promote transformation and upgrading of economic development, develop a modernized economy and guide Chinese economic development to take a new road of quality and sustainable development.

To take reduction of carbon emission for instance, according to China’s Policies and Actions for Addressing Climate Change (2017), in the past decade or so, as China’s economy developed,the country had reduced its carbon dioxide emission by about 4.1 billion tons.It is obvious that China’s economic transformation and upgrading featuring green economy and sustainable development has made remarkable initial results.

EFFECTS OF CHINA’S FOUR DECADE OF REFORM AND OPENING-UP ON WORLD ECONOMY

1. China’s Foreign Trade and Investment Has Clear Pulling Effects on Global Economy

The achievements made by China in economic development during four decades of reform and opening-up cannot be separated from the association and interaction between the country and the world market. As a major country with about a fifth of global population, it is natural that China’s influence on world economy cannot be overlooked. In the past forty years, China has all along pursued a cardinal policy of opening to the outside world and actively integrating into development process of economic globalization.

Against the backdrop of economic globalization facing increased resist-ance, China has as always remained active in promoting bilateral and multilateral trade and investment. In 1978,China’s import and export trade totaled RMB35.5 billion and by 2017 the figure reached RMB27.79 trillion according to the statistics of PRC General Administration of Customs, being 782.82 folds of that of 1978, among which exports increased from RMB18.74 billion in 1978 to RMB15.53 trillion in 2017 and that for imports, from RMB16.76 billion to RMB12.46 trillion. Related statistical data reveals that between 2011 and 2016 the proportion of China’s import and export trade value of goods and services in the world’s total increased from 8.4 percent to 9.7 percent.

China’s GDP and GDP per capita in the 40 years of reform and opening up from 1979 to 2017

The rapid growth of China’s foreign trade has made increasing contributions to prosperity of international market and international trade. Especially since the outbreak of the global financial crisis in 2008, the trend of relatively steady growth of China’s import and export trade has made no less significant contributions to the steady growth of global trade. The Annual World Trade Report of the WTO that came out in April 2018 shows that China’s export trade of goods continues to occupy the world’s first place whereas its import trade of goods is only less than that of the US, occupying the second place of the globe. Meanwhile, according to Statistical Bulletin of China’s Outward Foreign Direct Investment published by PRC Ministry of Commerce in 2017, the size of China’s outward foreign direct investment in 2016 reached US$196.15 billion, the country continuing to be the second largest global investor and for the first time taking up a proportion of above 10 percent in global total outward foreign direct investment.

Besides, by October 1, 2016, the RMB was included into the new SDR currency basket of the IMF, thus assuming the status of major international currency. As China’s economic strength is on the rise and the country keeps increasing its say in the global market, its import and export trade and outward investment will have increasing effects on the growth of global trade. China has increasingly become an important force in rebalancing global economy.

2. China’s Economic Transformation and upgrading Offers New Experiences to World Economic Development

China’s contributions to the growth of global trade are not limited to the increasing enormity of its trade size. Likewise, China’s economic transformation and upgrading also produces positive effects on the growth of global economy and trade. According to related data, between 2013 and 2016, the annual contribution rate of China’s end consumption to the growth rate of world consumption basically occupied the first place in the world and, in constant dollar terms,its annual contribution rate on the average reached 23.4 percent in the past few years. The Chinese market has increasingly become an important force for global growth in consumption.

World Trade Statistical Review published by the WTO in April 2018 points out that China’s reform on economic structure will have positive effects on the growth of global trade. The WTO believes that in long-term perspectives,the transformation of Chinese economy from mainly investment based to consumption based will be favorable for even stronger sustained economic growth of the country and in turn even more supportive of sustained growth of global economy. More importantly, as the largest developing country of the world today, China’s economic transformation and upgrading will offer important reference for other developing countries, providing broad developing countries with development path and development model closer to their conditions of economic development and thus giving important support for sustainable development of global economy.

3. China Takes an Active Part in Global Economic Development and Governance

As its economic strength is on the increase, China has gradually become active in participating in global economic development and economic governance. China’s economic achievements made in the past forty years of reform and opening-up are inseparable from the deep-going process of globalization and the favorable and stable international order. It is the policy China has pursued in recent years to be active in “going global”, expand the level of opening to the outside world and insist on mutual benefit and win-win situation.

Especially after the global financial crisis of 2008, China launched a number of measures to meet the new situation of slow recovery of global economy. On the one hand, it continued to raise the level of opening to the outside world, actively conduct construction and negotiations for free trade areas and spur global bilateral and multilateral trade and investment. On the other, to meet the situation of Belt and Road countries lacking fund for infrastructure construction, China timely made the Belt and Road Initiative. At present, over 100 countries and international organizations across the globe have actively supported and taken part in building the Belt and Road. The UN General Assembly and the UN Security Council have also fully approbated the content of Belt and Road construction in their important resolutions. The Belt and Road Initiative that features“achieving shared growth through discussion and collaboration” has become an important complement to existing international economic development mechanisms. In long-term perspectives, the Belt and Road construction will no doubt be of win-win situation and lay an important foundation for sustained growth of global economy.

PROPERLY ASSESSING CHINA’S ECONOMIC ACHIEVEMENTS OF PAST FORTY YEARS

It is beyond doubt that China has made achievements in the area of economic development in the past forty years of reform and opening-up. However, outstanding achievements cannot conceal some shortfalls existing in the country’s economic development.Therefore it is necessary to make proper assessment to China’s economic achievements of past forty years of reform and opening-up.

Many scholars believe that the key to China’s economic takeoff lies in the fact that the country has undergone such institutional changes that favor improving economic efficiency as marketization, industrialization and globalization, the organic synergy of which has spurred rapid development of Chinese economy. Particularly, reform on traditional economic structure has changed China’s mode of allocating resources, creating favorable conditions for rapid development of Chinese economy. There are also scholars who take transformation-economy perspectives and consider China’s economic growth as “transformation growth”. In market development perspectives, some scholars regard rapid development of Chinese economy as benefiting from the demand of huge domestic and external markets. There are also quite a number of scholars who take market-supply perspectives and attribute sustained development of Chinese economy to rapid development and application of technology and to effective transfer and employment of labor force. Besides, the government working out development strategy and implementing relevant policies has also become key factors of China’s economic development. Russian scholar Illarionov once compared conditions of China and Russia and pointed out that an important cause of rapid growth of Chinese economy is China’s economic policies and economic reform of the late 1970s.

With rapid development of Chinese economy in recent years, China’s comprehensive national strength keeps increasing. There are many scholars in the West who approbate and accept China’s achievements in economic development. Professor Ronald H. Coase,a well-known Nobel laureate in economics, wrote in his book How China Became Capitalist that China’s reform and opening-up that (for him) began in 1979 is the most successful economic reform movement in post-war human history.

However, there are people who think more or less differently of China’s economic attainments. On the one hand,many scholars are sceptic on sustainability of China’s economic development, considering past “China Miracle”in fact similar to Asian development models mainly depending on investment from undue high saving rate for propelling economic growth and believing that China’s economic development model is nothing but an exportled development model. More often than not, such questions are raised on the basis of making comparison from the angle of developing a market economy in the West. On the other hand, many a foreign scholar believes that the rise of Chinese hegemony will follow the rise of Chinese economy, of which the “theory of China threat” is doubtlessly typical. Since the Belt and Road Initiative was proposed by China in 2014, some of the scholars and media have taken it for a strategic carrier of Chinese edition of Marshall Plan. Furthermore, there are still thorny issues behind China’s current socio-economic development.

As a matter of fact, China has long been aware of the shortfalls residing in its development. Transformation and upgrading of economic development has thus become an objective actively pursued by the Chinese Government.The Report of the 19th CPC National Congress made it clear that Chinese economy is at a crucial stage of transforming growth model, optimizing economic structure and shifting driving force for development and based on this proposition launched six measures for action, namely deepening supplyside structural reform, speeding up making China a country of innovators,implementing the rural vitalization strategy, implementing the coordinated regional development strategy,speeding up improving socialist market economic system and bringing in place a new pattern of all-round opening up.At the Boao Forum for Asia Annual Conference 2018, President Xi Jinping further elaborated on the above development tasks.

China’s achievements in economic development in the past forty years attest to the fact that China is probing its way forward on a correct development path, and it is necessary for China to keep probing the way forward and dealing with many structural contradictions and problems arising in the process of socio-economic development in order to realize the Chinese dream of national rejuvenation. They are precisely the tasks and challenges facing socialism with Chinese characteristics in a new era.