Editor’s note: Song Zhe, commissioner of the Ministry of Foreign Affairs in the Hong Kong Special Administrative Region, shared his views on the country’s economy in a written article published in the Wednesday edition of the Hong Kong Economic Journal. Following are some excerpts from the original.
China’s economy has been undergoing an unprecedented transformation in recent years. This process has been accompanied by incessant criticism which has inevitably clouded some Hong Kong people’s views of the country. I find this situation worrying and have shared my views about this on various occasions. Now I’d like to explain where my confidence in the country’s economy comes from one more time.
First of all, my confidence stems from the economic fundamentals which continue to be more stable.
Like the great majority of economies around the world, Chinese economy has slowed down significantly after the global financial crisis of 2008. Its GDP growth rate fell from 10.4 percent in 2010 to 6.9 percent in 2015. Although the slowdown was quite sharp it was not the kind of free fall other economies experienced. China’s economy has been stabilizing, slowly but surely. In 2016 the world economy mostly remained weak; while China has made a sound start of the 13th Five-Year Plan (2016-20). Growth in the overall economy was not only steadier but also a bit faster.
The country’s economy, in the past year, can certainly be described as stable. At the same time it achieved progress in many areas. One is that the quality of growth improved noticeably; another is that the economic structure continued to develop, with the transition of growth engines from the old to the new going at a faster pace. People’s living standards continued to rise.
Second, I am also confident in the central government’s ability to address major issues with the right policies.
The central government has acknowledged the outstanding problems found in the process of economic development. It has taken positive measures to solve them. At the annual economic work conference of the Central Committee of the Communist Party of China last year, State leaders determined the biggest problems with the economy were the structural imbalance between supply and demand, the imbalance between the real economy and finance, and the imbalance between the property market and the real economy. They decided the only way to fix these problems was to launch a supply-side structural reform. This aims to reduce redundant supply as much as possible to achieve equilibrium of supply and demand. This will go further this year — so will the campaign to reduce stockpiling, deleverage, and rationalizing the property market.
Third, my confidence comes from understanding that socialism with Chinese characteristics is an advanced social system.
Competitions between nations are ultimately competitions between social systems. The reform and opening-up has been going on for almost 40 years. China has been able to maintain relatively steady economic growth because it enjoys the protection of a relatively advanced social system. As General Secretary Xi Jinping said in his speech marking the 95th anniversary of the Communist Party of China on July 1 last year, “Socialism with Chinese characteristics is the foundation for the systematic protection of China’s development and progress in today’s world.” In my opinion the strength of socialism with Chinese characteristics is demonstrated in four aspects of economic development:
1. Maintaining the leadership of the Communist Party of China — which is essential to socialism with Chinese characteristics.
2. Keeping the philosophy of development centered on the people so their fundamental interests are well served and improved.
3. Following a fundamental law that production must meet the needs of the people and help with the overall development of society.
4. The ability to go with trends of the times and to improve. The Communist Party has come to the conclusion, based on careful studies, that developing socialism with Chinese characteristics is the best system for China’s future.
Last but not the least, my confidence in China’s economy comes from the great contribution it has made to the world economy.
It is undeniable that China is the greatest contributor to the growth in the world economy nowadays. According to some calculations, China’s economy contributed more than 50 percent of the growth of the world economy in 2009-2011. Even though it has slowed down since 2012, China’s economy continued to contribute more than 30 percent of the world’s growth. In 2016, according to the estimates of the International Monetary Fund, China likely contributed close to 40 percent of the world’s growth, or 1.2 percentage points, compared with 0.3 by the US, 0.2 by Europe and 0.1 by Japan.
It is worth noting that China is one of the most important markets for commodities and services in the world. This role is expected to grow as Chinese consumers’ income increases.