In a relatively recent article I noted China’s rapid economic growth and the drivers of its tremendous progress. China is the world’s largest economy, according to Bloomberg Economics (April 2024), using the International Monetary Fund’s projections of global economic prospects. For the calculated calculations, Bloomberg used nominal gross domestic product (GDP) in dollars. Previously, measuring GDP in purchasing power parity (PPP), taking into account differences in the cost of living, the Asian giant was already the first economy in 2016 (see the PwC report: “Vision to the future: the world in 2050 .”
Currently, China represents 21.1% of the world’s GDP, while not reaching 19.3% of the GDP of all G7 countries (the most developed economies). China’s contribution to the global economy is practically double that of the US (11.9%). On the other hand, 75% of global growth in the next 6 years (2024 – 2029) is expected to be concentrated in 20 countries with more than half in 4 countries (China, India, USA and Indonesia). India accounts for 14.1% share during the same period, driving much of its economy due to its population growth (see Table 1). For their part, Canada and Italy (G7 members) contribute less than 1%, far less than poor countries like Egypt or Bangladesh.
Despite the West’s efforts to slow the rise of the Asian giant with protectionist measures (increased tariffs, sanctions, trade war, geopolitical conflicts, etc.), the Chinese have outstripped all countries. China has become the world’s largest economy. Whether we like it or not, the global economic regime has changed, as financial guru Ray Dalio (2022) states in his book “The New World Order,” “We are witnessing the decline of the old empire of the United States, and the rise of China as the new dominant economic power.”
Washington Post columnist, David Ignacio, in his latest article (April 26, 2024), points out the main reasons for America’s rapid decline: addiction to luxury and decadence, inability to keep up with the demands of technological advances. , “created” bureaucracy, loss of civic virtue, excessive military effort, selfish and warring elites, unsustainable environmental practices. Add to that other internal factors such as falling productivity, an aging population, a polarized political system and an increasingly corrupt information environment.
Following reforms that opened its economy to the world in the late 1970s, Chinese GDP growth averaged 10% annually for three decades. This extraordinary expansion became a magnet for foreign capital and gave it greater influence on the world stage. Large companies from other countries wanted to have a strategy for China and be there with their businesses.
To achieve a high level of growth, China had three main factors: the size of its workforce, its capital stock (factories, transportation infrastructure, communication networks, etc.) and finally, its high level of productivity. However, all this would not have been possible without the leadership of the Chinese Communist Party (CCP), whose strength lies in its ability to adapt to the continuous changes in the world from the Long March under Mao Zedong to the present.
On the 100th anniversary of the founding of the People’s Republic of China, an environmental program called “Made in China 2025 (MIC 2025) was launched with the aim of becoming a global economic center and a global technology leader by 2049. 2015. )”, a broad policy framework aimed at raising the country’s manufacturing base, from labor-intensive industries to knowledge-intensive high-tech industries. Under the leadership of the Ministry of Industry and Information Technology (MITI), the program focuses on 10 key sectors such as robotics, aerospace equipment, biomedicine, high-speed trains, new information technologies, etc.
At the 19th CPC Congress (October 2017), President Xi Jinping set out a calendar of challenges divided into two phases: In the first phase (2020 – 2035), the country’s main objective is to consolidate the foundations of a modern economy. In the second phase (2035 – 2050), China should take a central place in the international system.
Aware that technological innovation has become a major battleground globally, the Chinese government approved a new strategic plan in 2020, “China Standards 2035,” which aims to achieve technological self-sufficiency and set new global standards for China. New generation technologies. In the 2021-2025 five-year plan, the campaign to transform China into a manufacturing superpower has already been announced. China was determined to lead the Fourth Industrial Revolution.
On the other hand, projects such as “Made in China 2025” and “China Standards 2035” reflect the efforts of a country that already represents 20% of global investment in research, development and innovation (R&D+) and graduates 1.5 million scientists and engineers every year, the United States, Japan And more than Germany. Companies like China Mobile, Tencent, Alibaba, Baidu, Xiaomi, Huawei, CATL, BYD have become global giants devoting around 15% of their annual revenue to creating new knowledge.
The World Intellectual Property Organization (WIPO) mentions in its latest report the World Intellectual Property Indicators 2023, which reveals the immense superiority of the Chinese over the rest of the world. For example, in 2022, 3,457,400 patent applications were filed worldwide. Of the total, China submitted 46.84% (1,619,298 applications), the United States 17.2% (594,340 applications) and Japan 8.4% (289,530 applications).
However, the rapid economic growth and reforms promoted by the Chinese government have created ultra-wealthy people very quickly and in a short period of time. Of the world’s 500 richest people in the Bloomberg Billionaires Index, 81 are Chinese with a combined net worth of $1.1 trillion. It is surpassed only by the United States, where 162 billionaires own a total of $3.4 trillion. There are thousands of billionaires who don’t even make the top 500. According to another ranking, Hurun Global Rich 2021, China has 1,000 billionaires, the largest number in the world. This extraordinary rise of billionaires has resulted in high levels of inequality in Chinese society, which can be a trigger for social conflict as it occurs in other countries.
President Xi Jinping’s Political Manifesto to the 20th CPC Congress (2022) introduces a new challenge: “Chinese-style socialist modernization” in two stages: the first period, from 2020 to 2035, “socialist modernization”, and the second, from 2035 to 2049, “socialist general prosperity”. “That. These timelines are not new as they were in the report of the XIX Congress. A key aspect of this Chinese-style modernization is the so-called “common prosperity,” which was first cited at the 19th Party Congress in 2017. According to the Chinese president, “Chinese modernization is a modernization based on prosperity. “Common to all people. “Public prosperity is the essential requirement of socialism with Chinese characteristics.” This process is known as the Chineseization of Marxism (Zinization), which is understood as the adaptation of Marxism to the conditions and peculiarities of the country.
Clearly, this is a challenge towards a more egalitarian and socially cohesive society, united by common prosperity. That is, the aim is to reduce wealth gaps in the country and ensure that the economic power accumulated over the past decades is no longer asymmetric. The idea is to tackle the deep inequalities created with the rise of the economy in a very short period of time. The Chinese know that poverty and inequality are sources of conflict and social instability.
• The Chinese economic growth model shows that countries do not have a single path to growth. Asia’s great achievements are an example of progress to be reckoned with by other countries that are stuck in backwardness despite their vast natural resources.
• The Chinese government has been able to actively promote the triangle of “Economy, Education and Science”. To achieve this, they have spared no efforts and resources. This is evidenced by its registration of patents, trademarks and industrial design and its position at the top of the PISA assessment. These achievements are irrefutable evidence that scientific leadership inevitably translates into industrial and economic leadership.
• Despite the dire predictions of some Western analysts about the future of the Chinese economy, the reality is that its growth continues unabated and it is increasingly becoming more powerful than other economies. A growth rate of 5.2% last year and a growth rate of 5% in 2024 are examples of its vigorous economic activity.
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He is currently Senior Professor of Financial Economics at Universidad Nacional Mayor de San Marcos and Director of the Institute for International Economics and Business.
