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What backs China’s economic growth?

By Qin Shuo (People's Daily)    09:21, October 25, 2018

Night view of Shenzhen (Photo/Xinhua)

The China-US trade frictions have lasted for months. Influenced by the unilateral and protectionist policy of the US, the relations between the two countries could enter a new era featuring co-existence of cooperation and competition and continuous emergence of new problems and contradictions. 

Far-sighted people has pointed out that unlike the US which acts willfully, China feels shame to take tit-for-tat retaliatory measures against the US. Instead, it focuses on making the most of itself in order to getting through the difficulty.

According to the 2018 Business Climate Survey Report released by the American Chamber of Commerce in China, 73 percent surveyed American companies reported profits in China in 2017, another 74 percent planned to increase investment in China in 2018. Almost all the surveyed companies believed China had made steady and enhanced efforts on intellectual property protection and enforcement in recent years.

In addition, 62 percent US enterprises expressed that the procedure of policymaking and communication had become more and more transparent in China over the past five years. Without the stable business environment, these American companies wouldn’t have actively invested in China and gained rich profits.

The fundamental force for China’s economic development is the endeavor of all Chinese. In the past 40 years, the number of China’s market entities have grown from 490,000 to over 100 million, and 18,100 new enterprises are established every day.

This achievement is hard-earned, but undeniably it is the biggest of market economy with the largest number of participants in human history. The enthusiasm, initiative, and creativity of the Chinese people are released through reform and opening-up, as well as market economy. It is an epic of entrepreneurship, and of the struggle and the creation of hundreds of millions of Chinese workers.

China’s development is not an overturn of economic theories. Instead, it shows the world the importance of respecting the principle of market economy and the law of value.

China has become a world factory through reform and opening-up, industrialization, urbanization and market internationalization. The refined, large-scale and professional labor division supported by the huge market serves as the basis for the strong manufacturing capability of today’s China.

The mature and complete labor division and supporting system enable Chinese enterprises to efficiently manufacture most of the products in the world with good quality and in a cost-effective way.

China’s manufacturing ecosystem enables efficiency-driven innovation, according to a 2015 report by McKinsey & Company. China had the world’s most extensive manufacturing ecosystem, with more than five times the supplier base of Japan, 150 million manufacturing workers, and modern infrastructure, the report said.

The chain advantages from this ecosystem and the large scale gave Chinese hardware manufacturers a cost advantage of about 15 to 20 percent over foreign peers, the report pointed out. Thanks to China’s market and manufacturing advantages, the country managed to rapidly move its internet application sector forward to the forefront of the world.

China’s competitive power is a comprehensive one that acts with complex and rich division of labor and workforce skills. It will not be replaced or taken away.

In August, the International Trade Commission of the US held a 6-day hearing to decide for the Office of the US Trade Representative on whether to impose additional tariffs on 200 billion worth of Chinese goods.

At the first meeting, the proposal was endorsed by only 3 representatives out of 61 from luggage manufacturing, clothing, food processing, semi-conductor, bicycle and chemical industries.

A bicycle manufacturer pointed out that the US bought 18 million finished bicycles overseas, 94 percent of which were from China. In addition, out of the 300 million imported bicycle parts, 60 percent came from China. Since it was impossible to look for other suppliers out of China, the additional tariffs would place strong pressure on American consumers and factories.

China has benefited a lot from opening-up. The huge inflow of foreign capital has created strong spillover effects in technology, management, talent cultivation and supply chain in China, enabling the country to learn fast, digest and then improve and innovate according to its own characteristics.

Chinese companies have become the major force of technological innovation in the manufacturing of refrigerators, air conditioners and washing machines, as most developed countries have withdrawn from the manufacturing process and focus mainly on brand-building.

In addition, some powerful mobile applications, such as Alipay and WeChat, are all created based on the local environment in China. A lot of emerging market economies are “copying” Chinese products. Tokopedia is said to be the Indonesian version of Chinese marketplace Taobao and Snapdeal, the Indian version of Alibaba. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Hongyu, Bianji)

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