By Zhang Tianwei
There is a saying that when Wall Street sneezes, the world catches a cold. Recently, the domestic media have given Chinese characteristics to the adage: "When China has injections to bring down a fever, the world markets shiver with cold." Although it refers to economic ills and efforts to cure them, the popularity of the saying clearly demonstrates China’s great pride in its economic achievements.
The foreign media -- especially those of South Korea, Japan and the US -- recognize them, too. They are rife with buzzwords like "China Demand," "China Pull," or even "China Rescue," together with the old standby, "China Threat." As soon as the Chinese government took measures to cool the overheated economy, the South Korean government held a special meeting to analyze the possible impact of those measures on the South Korean economy and discuss responses it should make. Japan has been closely watching China's sustained high growth, which it believes will create an enormous market for the surplus production capacity in China's neighboring countries, and hence the opportunity for their economic development.
More exaggerated remarks appeared in Thomas L. Friedman's article, "Let Us Pray," which appeared in the May 2 edition of the New York Times: ". . . '[China's] economy is now fueling growth all over Asia, bolstering Japan and sucking up imports from everywhere. . . .' If the China bubble bursts, it will be the mother of all burst bubbles. . . . 'A lot of the world's stability or instability is resting on the leadership in Beijing. . . '"
While such opinions may be exaggeration, and while the reactions of some countries to China's economic adjustments are excessive, the fact is that China has become the locomotive pulling the train of the Asian --and possibly the world -- economy.
Back in 1997, when most Asian countries were suffering from the financial crisis, China stood as an important economic power in the regional economy and a responsible country by sticking to the policy of not devaluing its currency. It was the first time for China to flex its economic muscle at a crucial time for the region. That may have been when China's Asian neighbors first sat up and took note of its economic development, and also when they began feeling grateful for it. For several years following 1997, the double-digit growth of China's economy contributed to the economic recovery of the region.
Despite these achievements and regional contributions, we should take a panoramic view of the situation. Behind that glorious scene of development are some less attractive facts. In 2003:
· China was the world's number one consumer of coal and number two in gasoline and electricity;
· China accounted for 50 percent of the world's total consumption of cement, 35 percent of its iron ore, 20 percent of its alumina and 20 percent of its copper;
· In spite of its huge appetite, China’s GDP accounted for only 4 percent of the world's total.
Note that environmental costs were not included in that calculation. If they were, the input-output gap would be even more astonishing.
That gap illustrates two facts. First, most of China’s industries are high in energy consumption and pollution, but low in technology and output. China is still at the lower end of the production chain of the world economy. Second, China lags far behind the developed countries in resource utilization efficiency.
This context provides us with another perspective to view the recent cooling measures of the central government. That is, the measures are not only appropriate adjustments to domestic economic development, but also initiatives to adapt to external resource restrictions. If China turns its economy loose, it will wake up one day to find that the world doesn't contain enough energy and raw materials to satisfy its huge appetite. By that time, slamming on the brakes of growth could be devastating to the global economy as well as to its own. The "China Demand" that the world now welcomes would become synonymous with "China Threat". The only way to dispel fears about that sort of threat is to make appropriate adjustments to the economy and to overall development.
China's economic tinkering is indicative of a nation that takes seriously its responsibilities toward regional and world economic development. To continue operating as a reliable locomotive, a certain amount of tuning up -- and in some places, major overhauls -- must be done.
Picture this: A train is pulled by a racing locomotive built with obsolete technology and design. Efficiency is low and pollution heavy, while enormous amounts of coal and water are consumed to maintain speed. You are in one of the carriages of the train. Wouldn't you be wishing for a sleek, modern, high-technology engine?
The author is a commentator of the Beijing Youth Daily.
(China.org.cn translated by Ni Xiaoqiang, May 24, 2004)