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China’s economic transition brings new driving forces to the world

Updated: Aug 9,2016 3:14 PM

As China undergoes major economic transition amid the New Normal, the world’s second-largest economy is not only promoting domestic economic development, but also creating opportunities for global economy.

Consumption spillover

In the first half of this year, China’s economy kept a stable growth with 6.7 percent year-on-year increase. The consumption contributed a lot to such stable and qualified growth as its contribution rate reached 73.4 percent, 13.2 percent higher than the same period last year.

The growing Chinese consumption ability has a spillover effect on other countries. Data shows that last year the number of China’s outbound tourism visits reached 120 million and overseas consumption amounted to $200 billion. In addition, it is estimated that China will import more than $10 trillion commodities in five years.

China’s economic structural reform will transform the investment-driven economy into a consumption-oriented one, and the Chinese economy will step into a new growth stage, said an economics professor at University of Leuven in Belgium.

Such change will in turn offer huge opportunities for other economies.

With tremendous consumption needs on agricultural and dairy products, China has become the largest market for Australian agricultural and dairy products.

Tourism is a major income source for Thailand’s economy, accounting for nearly 16 percent of its GDP. In 2015, Thailand witnessed about eight million Chinese visits, which created $10.7 billion income, higher than any other country’s contribution.

International capacity cooperation

With open and comprehensive structural reform, the “going global” strategy of China’s advanced capacity pushes forward Sino-foreign capacity cooperation and stimulates new driving forces of the world economy.

Under the Belt and Road Initiative, China has signed capacity cooperation agreements with more than 20 countries.

Tanzania is heading for its second five-year plan targets and the African nation needs money, human resource, and technology.

With its advantages in infrastructure construction, China is coordinating with Tanzania in Tanzania-Zambia railway renovation and Dar-es-Salaam-Arusha power grid construction.

“Capacity cooperation between China and Tanzania comes at a right time, helping Tanzania to accelerate the process toward a middle-income nation”, said Makame Mbarawa, minister of communication, science and technology of Tanzania.

The Dehkanabad potash fertilizer plant, which is located at the southern region of Uzbekistan, is the first potash fertilizer plant in Central Asia. The plant produces 600,000 tons of KCI-fertilizers each year so far and creates more than 1,800 jobs for local people.

The plant is a cooperation project between China and Uzbekistan as the first and second stages of design and construction were made by Chinese company CITIC Construction.

“Made in China 2025” for in-depth cooperation

China’s structural reform will not only boost domestic economic growth but also advance global high-end manufacturing industries.

China’s “Made in China 2025” strategy will provide huge opportunities for British companies in sectors such as high-end technological equipment, management consulting service, finance, education, and industrial design. British manufacturing industry in particular will get more new and high-value customers from China, according to a report from UK Trade & Investment and China-Britain Business Council.

The UK Trade & Investment signed an infrastructure and energy project memorandum with China Development Bank last year, deciding to invest money to support British companies’ involvement in “Made in China 2025”.

Recently, Midea, a Chinese manufacturing company, reached an acquisition deal with KUKA, a German company prominent in industrial robot and automation.

“China is one of the most important markets. Only through cooperation with Chinese companies, can KUKA get a clearer understanding of the Chinese market and achieve faster development in China,” said Stefan Lampa, chairman of the board of management of KUKA Robert GmbH.