This is the pro argument in the second of two mini-debates The Globe is hosting in advance of Friday’s Munk Debates on China’s role in the 21st century. The topic: Will the Chinese economy drive the global economic recovery? Click here for the con argument.
China is the world’s second-largest economy, the world’s largest exporter, and has accounted for about 50 per cent of global growth since 2008. With continued weakness in Europe and the United States, sustaining even a mild recovery is inconceivable without it.
Drive the global economy? Maybe. Sustain and transform it? Almost certainly.
Deeply integrated into global supply chains and regional production networks, it is now the largest trading partner of Japan, South Korea, Taiwan, the Association of Southeast Asian Nations and India. Its foreign reserves have topped $3-trillion. Its outbound investment has increased to about $56-billion even as global investment is declining.
China’s most immediate impact on the world economy is through continuing support of the U.S. deficits and as the prime driver of about half of global demand for key commodities including cement, steel, iron ore, coal and oil.
Post-2008 domestic consumption of Chinese manufactured goods has increased along with the household spending of a fast-increasing middle class inside China and in other parts of Asia.
Policy reforms and market adjustments are forcing Chinese enterprises to move beyond low-wage production and toward more advanced positioning in global value chains.
Testament to China’s centrality is the more difficult question: Could it be the driver of the next global recession? Acute property bubbles, industrial overcapacity, and rising wages are significant challenges. The world and not just China has a stake in how well they are managed.
The bigger long-term story is China’s rising weight and role in managing and defining the global economy. For the moment largely a “responsible stakeholder,” China’s leaders are playing a generally constructive role in institutions including the World Trade Organization, International Monetary Fund, World Bank and G-20, even as they support new regional ones that give hints of an alternative design.
China’s authoritarian capitalism is not a model for many other countries. But nor will it quickly converge with Western practices in the realms of political institutions, corporate governance or economic structures.
Global power shifts have moral and political as well as economic consequences. With greater economic weight is coming greater assertiveness about the rules of the game. What Beijing thinks about the preferred mix of states, citizens and markets will be a defining feature of the world economy in the messy, multicentric, era we have entered.
Paul Evans is director of the Institute of Asian Research, University of British Columbia
Editor's Note: The Munk Debates are semi-annual events that feature prominent figures in their fields. The next debate, to be held June 17, asks whether the 21st century will belong to China. It features former U.S. Secretary of State Henry Kissinger alongside economist David Daokui Li, CNN host Fareed Zakaria and historian Niall Ferguson.
For more news, videos, interviews and biographies, follow The Globe and Mail 's coverage of the upcoming debate here.