The World’s Growth Engine

Xi Jinping president of PRChinaChina’s development is an opportunity for the world…

China’s development will continue to offer opportunities to business communities in other countries.

Xi JinPing, President of the People’s Republic of China, Davos 2017

In recent decades, the Chinese economy has been the growth engine for the world.

The opening up of China to market reforms and outside investment from 1978 reversed a long period of decline. China is now the second-largest economy in the world, and in due course it will reclaim its place as the largest.

Inexorably the Chinese economy is integrating with the rest of the world, with China the world’s greatest exporter, and second-largest importer of merchandise goods.

In the UK and elsewhere, Chinese investment is making itself felt in sectors such property, business and leisure.

At home the Chinese consumer is now driving growth; abroad, the Chinese are the world’s top tourism spenders.

Whenever concerns are raised about slowing Chinese growth or investment, these are rapidly reflected in global Stock Markets. The old adage “When the US sneezes, the world catches a cold”, has now been replaced by “When China sneezes…”

As these trends continue, career and business opportunities will abound for those willing to understand China and to learn Chinese.

These may be in working directly in China, or for a Chinese business. Or maybe you by running a business that trades with China. In the service sector or the professions, Chinese may turn out to be a valuable tool for those working in tourism or education, or as Chinese businesses expand abroad, in law, finance or accountancy.

What’s the Fuss?

To the target audience of the Bucks Skills Show, China’s resurgence may not seem so extraordinary. After all, to a teenager there’s nothing novel about China playing a significant role in the world’s economy and on the world stage.

But to those with longer memories, or a historical perspective, it has been a remarkable transformation.

For almost two millennia, China’s was the largest economy in the world. Its pre-eminence was lost through the nineteenth century, as it tried to remain largely closed to outside influence, at a time when the Industrial Revolution was transforming western economies. The early twentieth century was characterised by conflicts and internal turmoil, leading eventually to Communist rule.

Soon after the death of Mao Zedong in 1976, things started to change. The beginnings of reform and opening up the economy from 1978, and the joining of World Trade Organisation in 2001, were two significant milestones, bringing in deeper integration with the outside world. The subsequent long period of growth has returned China to the second-largest economy in the world, and in due course it will reclaim its place as the largest.

300 years of china's economy

Source: The Economist

Four key graphs and images

The graphs and images below are just a small selection, showing the acceleration in Chinese growth and engagement. Even with some likely bumps and moderation of growth rates, they should be enough to convince that China will become an ever increasing factor in our lives.

First, GDP. The graph compares the Gross Domestic Product of the US, China and the UK since the start of the reform process. China has become the second-largest economy in the world, and will probably displace the US by around 2030. Since China overtook the UK in 2006, it has become 4 times larger in just 10 years!

GDP growth of USA, China and UK

There is a similar trend in global trade. In the 30 years between 1985 and 2015, the total value of China’s imports and exports increased 136-fold! China is now the world’s largest exporter and second-largest importer of merchandise goods.

international trade shares last 30 years

Investment was critical to China’s early growth, but now consumer spending is leading the way. This has led to tech and ecommerce companies Tencent and Alibaba to be listed among the world’s 10 most valuable corporations.

world top 10 corporations by market capitalisation September 2017

China’s Belt & Road Initiative shows China’s ambition to lead on global trade. If realised, it promises to be one of the greatest infrastructure projects in human history, connecting over 65 countries across Asia, Europe, Middle East & Africa.

China's belt and road initiative

Some useful links:

week in china logoWeek in China. An independent, Hong Kong-based publication, giving context and commentary on the key business trends emerging from China. Draws on a combination of Chinese and English language sources in the press and on the internet. Free subscription, delivers a weekly digest to your inbox. Download Week in China weekly edition dated 6th October