China: an Important Player in the Global Economy

Global Center Stage By Tejinder S Lamba*

China: an Important Player in the Global Economy

China is experiencing an economic growth slowdown; it may have a serious effect on the U.S. and the global economy.

China is a major economic player in the Global Market Community. China is the world’s largest manufacturer and biggest exporter. Hardly any developing economy comes close to China’s contribution to global growth. The Chinese economy remains the single largest contributor to world GDP growth. No matter how you view it, China remains the world’s major growth engine. China is fast catching up as a global economic forum, while the public perception around the world, including India, is that the US still remains at the top. Though the rise of China to inevitable global leadership is the most important structural feature of the world economy in the twenty-first century.

China’s rise in the global economy

China, officially the People’s Republic of China, the most populous country of the world, has the second largest economy in the world ranked just below the United States. In the last about four decades, China has consistently developed a remarkable economic growth. As a result, the country’s importance has grown the world over. By the size of its economy and its potential for sustainable economic growth, China stands today as a political and economic world power that impacts not only the Asian economy but also the global one. China is the world’s manufacturing hub, specializing in the labour-intensive, export-led production of cheap goods that enabled a gradual increase in product complexity. In a nutshell, its growth strategy is to assemble and sell cheap goods to the world.

How is China shaping the global economic order

Along with the review of the economists’ analyses of the new role and associated challenges, there are also hints that the Chinese government recognizes the great responsibilities that come with their new global role. To understand China’s growth and development objectives in the global trading system, it is important to emphasize how different the circumstances are for China and the developed countries. China has also quickly risen in the global competition in such fields as communication equipment, high-speed railway equipment, nuclear power equipment, and engineering machinery.

China is already the leader in providing a vision of globalization and in taking new initiatives. The shift in driving forces for development is accelerating. The Chinese government has introduced a slew of measures to liquidate some companies with overcapacity and quicken upgrading of traditional industries. As mass entrepreneurship and innovation came into the limelight, new market entities have been nurtured

Obviously, China is progressing a new model of global economic cooperation. It has a broad vision for international economic cooperation and interaction. It is actively working with the UN, G20, BRICS and other multilateral cooperative mechanisms by playing a constructive role in addressing the common challenges facing the world. China is expected to account for more than 70 percent of the total growth of the so-called BRICS grouping of large developing economies. What China is looking for is to coordinate efforts to make the emerging international system more balanced, equitable and sustainable. It is no surprise that China champions globalization. For China, export markets have spurred a growth rate sufficient to move millions of people out of poverty into the middle class and affluence.

Impact on the US economy

The United States has been the world’s biggest economy since long, but that top ranking has been under threat from China. The different phases of economic cycles toss economies around the world. However, these top economies don’t budge easily from the positions they hold. China, with its giant economy, has a huge influence on world economies, particularly those related to China. A decrease in domestic demand in China will most likely adversely impact the world economy and slow down global economic growth. The United States is one of the countries that is likely to be affected by a slowdown in the Chinese economy because of the expected decrease in the export of goods and services to China. Since recently the Asian giant. China is experiencing an economic growth slowdown; it may have a serious effect on the U.S. and the global economy. Concerns are being raised that there is a wide possibility that the slowdown in the economy of China will have negative impacts on the markets that are closely related to its economy, one of them being the United States.

There is a ‘Trade War’ between the US and China. The US has raised tariffs on certain imports. China has retaliated. a) The US imposed tariffs on Chinese imports to reduce this massive deficit with China. b) The US also wanted to protect its domestic producers from competition from cheap Chinese products. c) It also wanted to protect jobs in the US. The point is to target China by making Chinese products more expensive for American consumers and businesses to buy. If Chinese products suddenly become more expensive, Americans will buy those same products from somewhere else, and Chinese businesses will ultimately suffer.

China immediately accused the US of starting “the largest trade war in economic history to date” and retaliated by imposing tariffs on the US goods. This is only the beginning as more tariffs may come. Free trade indeed is beneficial to all. China’s ambition to sustain an open-trade system is out of self-interest. Since China incrementally integrated itself with the world economy in the post-1978 era, it has reaped huge economic benefits. Prolonged trade war will certainly lead to slower global growth. The expansion of China’s economy brings it to about two-thirds the size of the US as of today, and at the current rate could overtake it within the next decade. However, it is the trade war with China, currently in a state of confused and uneasy truce, that represents the clearest and most immediate danger to what’s left of global prosperity. Time will tell what will be the impact of the trade war between the US and China.

Conclusion

China today is a global player both as the largest manufacturing economy and the largest export economy in the world. The simple fact that many of the products people use in their daily lives the world over are made in China, shows the importance of the Chinese economy. Any developments in China, be they negative or positive, influence the world’s largest economy and the world economy overall. China offers a Chinese approach to problems facing humankind and is playing an even greater role in global governance by putting forward such concepts as a community with a shared future for humankind, promoting democratization of the global governance system, and endeavours to give more say to developing countries. China has shown a great development potential from its remarkable economic growth rate these years.

There is a long way to go, but China aspires to play a crucial role in global recovery and sustained prosperity. What are China’s global economic intentions? Will China be the world’s globalization champion? The answer is “perhaps”, the world needs China a global player today. No one can be blamed for wanting to believe that China is leading the world economy into the future when it seems that no one else can or will.

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Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.

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