“By 2035, we will have finished building a high-standard socialist market economy in all respects, further improved the system of socialism with Chinese characteristics, generally modernized our system and capacity for governance and basically realized socialist modernisation.”
By Tichaona Zindoga
China is projected to become the world’s leading economy by the year 2050, overtaking the United States of America, which is the current leading global economy. It is therefore no surprise that despite the economic headwinds experienced globally, which have also affected China, there is optimism about China’s capacity and its ability to assume global leadership. Judging by the statement above, from the 3rd Plenary Session of the 20th Central Committee of the Communist Party of China, the Asian giant has in it the power to achieve its goal well ahead of time, which will not be just a success for the country, but also a template for the world to follow its example of beating an independent path towards modernisation.
As the world once again faces economic uncertainties typified by the stock market crashes experienced this past week and fears of a possible recession, a situation exacerbated by the deteriorating global security situation and climate change which is producing extreme weather events, China’s economic resilience holds the key to global economic stability.
Why is China’s economic health important globally and to countries like Zimbabwe? As the world’s second-largest economy and a major trading partner for many countries, China’s economic health directly affects global trade dynamics. A strong Chinese economy boosts global demand for goods and services, benefiting exporters worldwide. China is a key player in global supply chains, meaning that disruptions in its economy can lead to significant ripple effects, impacting production and availability of goods globally. Its economic performance influences global financial markets, implying that economic instability in China can lead to volatility in global stock markets and affect investor confidence.
For developing countries like Zimbabwe, there are added imperatives for China’s economic stability and growth because China has invested heavily in developing countries, particularly through initiatives like the Belt and Road Initiative (BRI). These investments help build critical infrastructure, such as roads, ports, and railways, which are essential for economic development. The Asian nation is the destination for exports, including minerals, metals, and agricultural commodities – the goods produced by primary industries that dominate the developing world, particularly Africa. Experts note that a healthy Chinese economy means sustained demand for raw materials and goods from these countries, supporting their economic growth.
Another key benefit of Chinese economic stability and leadership regards technology and knowledge transfer. China’s advancements and growth in technology and innovation has continued to benefit developing countries technological capabilities and economic development. In Zimbabwe, for example, Chinese technology and machinery are transforming mining and manufacturing industries and assisting local entrepreneurs to produce more and create wealth.
How the Chinese economy performs is thus an important highlight of global economic health.
Better performance
Despite challenges, in July, economic data showed that China’s economy performed better than expected amid gloomy prognostications. China’s economy grew by 5 percent in the first half (H1) of the year, signalling a steady recovery despite challenges at home and abroad, and reaffirming its role as a vital engine for global economic growth.
The country reported a record-high of H1 trade value in goods with a growth rate of 6.1 percent, and secured another bumper harvest of summer grains. The output of smart and green products such as integrated circuits, service robots, new energy vehicles and solar panels grew double-digit, cementing their role as new growth drivers.
Domestic demand continued to recover and external demand improved. In the first half of this year, final consumption expenditure contributed 60.5 percent to economic growth, driving GDP growth by 3.0 percentage points. Gross capital formation, a measure of investment, contributed to 25.6 percent of economic growth, driving GDP growth by 1.3 percentage points. Net exports of goods and services contributed 13.9 percent to economic growth.
Extreme weather and floods contributed to the second quarter decline, which also reflected increasing difficulties and challenges in current economic operations, such as insufficient domestic effective demand.
Sound policy
“Bright spots are noticeable,” a State-media commentary said of the economy’s performance.
The Chinese economy is still in a critical period of recovery as well as transformation and upgrading, growing in a wave-like fashion amid twists and turns. The H1 performance illustrated this. The second quarter saw a 4.7 percent GDP growth year on year, down from the 5.3 percent in the first qua
From a medium- to long-term perspective, the trends of China’s stable economic operation and sustainable improvement remain unchanged. The transformation toward high-end, intelligent, and green manufacturing is progressing solidly, nurturing new industries and new growth drivers.
But China’s situation is not as gloomy as detractors want to paint it, which is why its holding steady confounds critics. The determination by authorities to put a sound policy framework that will ensure that China does not only steady the ship, but pick up pace, is good for the global economy at a time when other countries such as the United States are likely to face challenges and, at worst, go down the abyss altogether.
The Third Plenum which sat last month and committed to further reform and modernisation has set the country for success, which the world – mostly developing countries – will be watching with keen interest.
The meeting emphasised the building of a fairer and more dynamic market environment, promoting high-quality development, supporting all-around innovation, developing whole-process people’s democracy and boosting cultural confidence, and described opening up as a “defining feature of Chinese modernisation.”
The resolution of the meeting said: “Advancing reform is essential for upholding and improving the system of socialism with Chinese characteristics and modernising China’s system and capacity for governance, for putting the new development philosophy into practice and better adapting to the evolution in the principal contradiction in Chinese society, and for adhering to a people-centred approach to see that the gains of modernisation benefit all our people fairly.”
It spelt out a number of imperatives and strategies that include, Improving the institutions and mechanisms for fostering new quality productive forces in line with local conditions, intended to give rise to new industries, new business models, and new growth drivers and promote the development of productive forces that are characterised by high technology, high performance, and high quality. The Party committed to improving the systems for promoting full integration between the real economy and the digital economy, moving faster to advance new industrialization, promoting the growth and expansion of advanced manufacturing clusters, and making the manufacturing sector higher-end, smarter, and more eco-friendly as well as set up a number of industrial generic technology platforms, accelerate the transformation of industrial models and organizational forms of enterprises, and refine the institutions and mechanisms for enhancing China’s leading position in industries it excels in.
Further, the ruling party underscored the need to refine the institutions and mechanisms for developing the service sector to propel high-quality development of producer services on a sector-by-sector basis, invigorate industrial internet platforms, remove administrative barriers that impede trans-regional business operations, and promote the integrated development of producer services. At the same time China is seeking to improve the institutions and mechanisms for modernising infrastructure that will see it advance the digitalisation of traditional infrastructure, diversify investment and financing channels, refine the coordination mechanisms for major infrastructure construction projects; and further reform the integrated transportation system, advancing reform of the railway system, developing general aviation and the low-altitude economy, and optimizing the policy on toll highways, among other areas.
In terms of industrial and supply chains, China aims to “move faster” to build industrial and supply chains that are self-supporting and risk-controllable, improve the institutions and mechanisms for bolstering key industrial chains such as integrated circuits, industrial machine tools, medical equipment, instruments, basic software, industrial software, and advanced materials, and strive to secure more technological breakthroughs that can be applied across entire industrial and supply chains.
Other key areas that China is working on include supporting all-around innovation through education, science and technology, and talent function as basic and strategic underpinnings for Chinese modernisation.
China’s economic resilience, supported by sound planning and management by the ruling CPC, which is clear on its goal of attaining a modern socialist economy, are key ingredients of a strong China, which will have a positive bearing on the global economy and benefit countries such as Zimbabwe.