Should anyone worry if China overtakes the US?
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[By Jiao Haiyang/China.org.cn] |
Various observers have noted this week that China's economy will be bigger than that of the United States, in 2016. This comes from the International Monetary Fund's (IMF's) latest projections, which were made in its semi-annual April World Economic Outlook database. Since 2016 is just a few years away, and it will be the first time in more than a century that the United States will no longer be the world's largest economy, this development will be the object of some discussion – from various perspectives.
First, let's consider the economics. China has been the world's fastest growing economy for more than three decades, growing 17-fold in real (inflation-adjusted) terms since 1980. It is worth emphasizing that most of this record growth took place (1980-2000) while the rest of the developing world was doing quite badly by implementing neoliberal policy changes – indiscriminate opening to trade and capital flows, increasingly independent central banks, tighter (and often pro-cyclical) fiscal and monetary policies, and the abandonment of previously successful development strategies.
China clearly did not embrace these policy changes, which were promoted from Washington by institutions such as the IMF, World Bank, and later the WTO. (China did not even join the WTO until 2002.) It is true that China's growth acceleration included a rapid expansion of trade and foreign investment. But these were heavily managed by the state, to make sure that they fit in with the government's development goals -- quite the opposite of what happened in most other developing countries. China's goals included producing for export markets, promoting higher levels of technology (with the goal of transferring technology from foreign enterprises to the domestic economy), hiring local residents for managerial and technical jobs, and not allowing foreign investments to compete with certain domestic industries.
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