With the world entering a simultaneous recession, triggered by the economic crisis that started in the United States, China's once red-hot economy is also clearly cooling. It is hard not to worry about the extent of the slowdown, given that China has been serving as "the world's factory" for goods of every description.
It now seems certain that China's economic growth for 2008 will be below 10 percent for the first time in six years.
The primary factor behind the slowdown is weakening exports. The economic downturn in the United States, which had been gobbling up Chinese exports, has forced many textile and toy factories in China's coastal areas to close.
Before the Beijing Olympics in August, economists had warned that China's economy would likely slow down once the Olympic-mania had faded. The global downturn has clearly made things much worse. After years of rapid growth that raised concerns about overheating, China's economy is apparently at a major turning point.
The downshift in China's growth will be painful for the rest of the world as well. In the United States, where the financial turmoil has yet to settle, the effects of the slumping economy will become much clearer in coming months.
Increasingly, economists are predicting it will take at least several years for the US economy to fully recover. Even after the US economy regains strength, the rest of the world would do well to lessen its dependence on exports to the US market for growth. The question then is which country could provide significant support to the world economy.
Few people are expecting Japan to fulfill that role because of the country's dismal growth prospects due to the contraction of its population. Some experts had placed much hope on the European Union, but Europe's economy is also losing steam as the financial crisis spreads.
Hopes are now being pinned on the world's four fast-growing developing economies collectively known as BRICs, especially China.
China is now the world's fourth-largest economy in terms of GDP. Some economists predict China will overtake Japan in the 2010s and then the United States in the 2030s to become the world's No 1 economy. No other country has as much growth potential as China. The other three BRICs - Brazil, Russia and India - have economies that are only one-half to one-third of China's in size.
Beijing intends to take steps to stoke domestic demand to keep the economy on the path of strong growth. Among measures being planned are increased farm subsidies and loans to smaller businesses and more investment in industrial infrastructure and private-sector projects. These steps will be taken in addition to efforts to ramp up exports.
China needs annual economic growth of 7 to 8 percent in order to create 10 million new jobs every year. Such robust economic growth is essential for making sure that the benefits of economic development filter down to the massive ranks of the poor and thereby help maintain social stability. This explains the Beijing's scramble to prevent a serious economic slowdown.
Because of China's huge population and enormous growth potential, economic trends there have powerful, far-reaching effects on the world as a whole. China's influence is felt in a wide range of areas. These include the fields of natural resources and energy problems and environmental protection as well as trade, investment and international finance.
The challenge facing China is how to make its economy more stable and socially balanced while maintaining robust growth. We hope China will pursue this ambitious vision with vigor for the sake of the world.
The Asahi Shimbun
(China Daily 11/13/2008 page9)