Economy
China's future development faces complicated situation
(Xinhua)
Updated: 2010-10-18 13:39
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BEIJING - The US Treasury Department has decided to postpone its six month report on the currency practices of its major trading partners after the upcoming US Congressional elections turned Chinese currency, the yuan, into a tricky campaign issue.
But scholars from Beijing said this decision might not help take much of the heat off China as long as people turn a blind eye to the ongoing changes within the Chinese economy.
What's worse, they said that China was very likely to face a myriad of foreign disputes in the future as its economic development continues to dwarf the rest of the world, and thus would make the country a scapegoat that the authorities of some foreign countries might conveniently blame for domestic issues or see as an imaginary menace to those who distrust China's peaceful rise in the new century.
As Chinese leaders are holding a high-profile meeting this weekend to map out the country's development plans for the next five years, these scholars foresaw the proliferation of foreign disputes, saying that China must learn to deal with the rest of the world in an increasingly complicated international environment.
Dr Mei Xinyu, an associate researcher with the International Trade and Economic Cooperation Institute of the Ministry of Commerce, said China had inevitably become the world's largest victim of trade protectionism.
"One of the most important aspects of trade protectionism is to use political pressure to force the appreciation of the RMB yuan," Mei said.
On the same day when the release of the currency report was postponed, the US government launched a new probe targeting China's "green technology" trade policies based upon allegations that China was unfairly supporting its manufacturers of wind and solar energy products, advanced batteries and energy-efficient vehicles.
"To me this is nothing strange because China, as a top student in global trade, is facing a much tougher situation, although trade protectionism is easing with the gradual economic recovery," said Mei.
Statistics showed that the first quarter of the year has seen a 20 percent decline in the world's total newly launched temporary import restriction measures, including newly launched anti-dumping, countervailing and special protective cases.
About 47 percent of these measures were targeted at China.
From January to August, 17 countries and regions have launched 79 trade remedy investigations against China involving an aggregate value of $10.035 billion, up 16.2 percent and 121.2 percent, respectively, from the same period last year.
Xiao Geng, director of the Columbia Global Center in East Asia, said that foreign disputes have already evolved into a significant factor that Chinese decision makers could not shrug off since the Chinese economy had come to a crucial transformation period and, at the same time, served as the engine of the global economy.
Since the world slipped into depression stemming from the US's Subprime Crisis, many developed economies had been dealing with a deflationary economic environment, struggling to curb high unemployment and to raise prices, while by contrast, the Chinese economy maintained a rapid growth.
Although China's per capita GDP was still low, still more than half of the current increase in the world economy had been generated by China, said Xiao.
According to the latest forecast of the Chinese Academy of Social Sciences (CASS), a national think tank, the Chinese economy would grow 9.9 percent year-on-year this year.
Another long-term report from Morgan Stanley forecasted that the Chinese economy would register 8 percent growth in annual average GDP through 2020.
"Given that the stark contrast in economic development would continue to exist, China must learn to cope with the disputes more often triggered by its rising visibility across the world. And I think there are two ways: one is to do its own job well, the other is to better introduce itself to the world," said Xiao.
On the financial and trade fronts, he said, unreasonable requests, such as one-off revaluation of the yuan, had been repeatedly brought up because the political system in the West, featuring short tenure and frequent elections, would force politicians, especially Congressmen, to cater to the short-term demands of their electorate and thus politicized the issue and aggravated trade protectionism.
"To remedy the situation, China needs to remove the misunderstandings among foreign people and tell them about the real changes going on within China. For instance, the good old days of having cheap Chinese goods will come to an end. Rising labor costs, more expensive raw materials and growing environmental costs will all lead to a waning edge in exports, and contribute to a booming demand for foreign goods and services," said Xiao.
Looking to the next five years, Xiao said that China must manage to strike a good balance among three significant macro-economic management indices, namely the inflation rate, currency rate and interest rate, to secure a steady and sustained economic development.
"If the Chinese economy could be shifted from more of a quantitative growth to more of an expansion in quality, China could better contribute to the world by serving as a more solid engine," said Cao Honghui, director of the Financial Market Research Department of the CASS Financial Institute.
He hoped the government could establish a more systematic reform, and in particular take into consideration the co-relation between the RMB's exchange rate reform and the upgrading of its economic structure.
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Director Yu Pei of the CASS's World History Institute called the move to award this year's Nobel Peace Prize to convicted Chinese criminal Liu Xiaobo "a manifestation of the imposing of Western democracy upon China".
"There is no single formula fit for all countries when it comes to democracy. China has the right to explore its own way of democracy as the world is changing toward multi-polarity and diversity," he said.
"Finger-pointing would not make China abandon its way of development, but only reminds China to remain sober-minded and keep examining itself," said Mei Xinyu.
As the world has entered into a time of great changes, international economic and political situations would certainly become more complicated and bring new challenges to the Chinese leaders, said Dr. He Xingliang, a researcher with CASS's Institute of Ethnology and Anthropology.
To cope with the disruptions in the name of democracy, human rights and religion, Dr. He said that China should refrain from speaking in defense of itself, but make down-to-earth efforts by deepening domestic reforms, improving people's standards of living and safeguarding social justice and fairness.
"When people live and work in peace and contentment, they will natural be cemented and more energetically and confidently seek a rejuvenation of the Chinese nation," said He.
Yu Pei said that a clear understanding of the domestic and world situations would help Chinese leaders make the right decisions amid a complicated environment.
"The starting point of all policies to turn China into a big, but powerful country, should be the fact that China remains a developing country and is still in the primary stage of its Socialism," said Yu.