#China: Breaking with globalization is ill-advised

china-crash-headerChina’s growth in recent decades is an economic miracle. By taking 728 million people out of the UN-defined poverty line (contrasting to only 152 million by the whole rest of the world since 1981), China has become an undoubted second largest economy with nearly 39% (in 2016) contribution to the world economic growth. China’s economic structure is evolved adaptively, from a central-government ruling economy to a market-oriented one, writes Professor Ying Zhang, RSM, Erasmus University Rotterdam, in the China Daily Europe. 

Since 2001, China’s access to the WTO, the world has benefited enormously from China’s contribution. As a return, China also significantly benefited from collaborating with WTO members, in terms of improving manufacturing efficiency, technology and innovation capability, and boosting economic power and national catching-up. The WTO basic rule is on non-discriminatory “national treatment”, mutual trust and the concept of globalization, allowing members to freely trade to each other with respect to each comparative advantage.

However, the 2008 economic crisis has created endless pain for both developed and developing countries. Taking the most important indexes to evaluate an economy —GDP growth rate and unemployment rate, many of advanced countries have been exhibiting weak capabilities to recover. The weakness was mainly evidenced by their social-economic structural weakness in sustainably growing economy and well-being. In the post crisis era, calculating the extent to which China can directly contribute to the other countries’ economic growth has become the keynote. China has no longer been an economic spillover taker but an economic spillover giver.

With China’s strong willpower and effort to transit their economy to be sustainable from a manufacturing – and investment-based one to a service- and consumption-oriented one, the worries especially from those economically depending on China’s economic growth has been significantly growing. Therapies to get over economic fatigues are presented in front with two options: either to follow the globalization concept and obey WTO rules for open collaboration in a long-run, or to close the door and advocate de-globalization concept and protect domestic uncompetitive industries. Options of such two cannot be parallel and it is known that de-globalization in a long run will hurt economic sustainability, political stability, and social advances.

The purpose of WTO is to encourage international trade and facilitate technology and social advance in order to excel each member’s comparative advantage. Advanced countries such as USA, EU, and Japan had bypassed the efficiency-based economic development phrase and are now in the stage of innovation-base. The focus for them should be to increase collective social welfare by moving their economies to a more equality-defined sharing economy. Denying other countries such as China’s market status instead and being eager to apply punitive tariffs will not be working. This purposive misinterpreting China’s economic structure, identity, and development model, drawn from their internal economic-political unrest, is not only simply to China, but also more to against globalization.

China’s important role in the world economy will have to continue, even with some unwise noise from a number of countries’ self-interests and de-globalization mindset. In the past decade, China has encountered numerous anti-dumping investigations from a few WTO members but none of them would have survived without China’s contribution. By far, China has obviously raised enough manufacturing and technology capacity for taking care of the world consumption in a high quality and cost ratio, and far more sufficient domestic consumption capacity preparing for a deglobalization phenomena. For many of those countries advocating deglobalization, the consequences are from their inertia in existing unadaptive economic and social growth structures and unrealistic expectation to the shock therapies from deglobalization concept in the short-run.

My comment at last is: the world, especially in the post economic crisis era, must be a global economy, requiring all local economies to collaborate and collectively transform to a sustainable entity with joint prosperity. In the circumstance where most of the countries find it difficult to recover from the crisis, China has been acting as a very responsible partner. Denying China’s market identity and its role in global landscape with de-globalization mindset is not wise and will bring our world to an even worse situation.

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Category: A Frontpage, China, EU

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