In light of recent statistics regarding China’s economic growth, Zhang Monan discusses the “new normality” of Chinese economic growth. In addition to this, Monan discusses the weakening of the driving forces of net exports and its effect on economic growth in China. Moreover, Zhang Monan asserts that Chinese domestic investment is undergoing rebalancing due to a change in consumer demand.
The RMB exchange rate should gradually reform with less government interference, writes Yi Xianrong.
The temptations of extrapolation are hard to resist. The trend exerts a powerful influence on markets, policymakers, households, and businesses. But discerning observers understand the limits of linear thinking, because they know that lines bend, or sometimes even break. That is the case today in assessing two key factors shaping the global economy: the risks associated with America’s policy gambit and the state of the Chinese economy.
Following World Bank projections that China will become the largest global economy based on purchasing power parity, William Yu contends that better economic ranking indicators exist, like market exchange rate. Using this measurement, where U.S. GDP was calculated at $17 trillion compared to China’s $9.1 trillion, China’s economy is expected to surpass the U.S.’s sometime in the next two decades.
Recent reports on China’s GDP are based on an overestimation of China’s purchasing power parity due to different calculation methods, writes Niu Li. While China’s aggregate economy is very large, it must continue to build up its service industry and increase domestic demand rather than solely focusing on the quantity of economic growth.
After Luo Zhaohui, China’s incoming ambassador to Canada, labeled Canada’s foreign investment rules as “negative” and called for “some kind of changes” to the nation’s trade policy, Hugh Stephens examines why bilateral trade relations have declined and what Canada and the United States can do to promote greater investment from China.
Is Cuba actually following the “China model” of economic reform and development? While Cuba indeed has been influenced by China’s rapid economic growth, Fernando Menéndez argues that Cuba’s moves are a retreat by the state from certain economic activities, it is still far from the Chinese model.
Despite predictions that the Chinese economy will overtake the US in 2014, China will still remain world No.2 for years, writes He Weiwen.
Due to China’s rapid economic growth, the country is now incurring the hazardous effects of its accruing environmental damage. China’s environmental problems are exacerbated by global demand. The U.S. and China can attain mutual benefits by collaboratively cleaning up China’s eco-system. China should also capitalize on innovative green technologies to develop the interior and the west of the country.
The issue of cyber warfare and other cyber security incidents is becoming a serious problem for China, and is causing problems with its relations with foreign powers. In particular, China and the US have seen an increase in tensions due to cyber security issues initiated by US intelligence. The two powers should cooperate to avoid future cyber related conflicts.
In the future, Americans may not worry about the Yuan being undervalued, but will rather worry that a rapidly appreciated Yuan may erode the dollar’s supremacy and thus share the benefits enjoyed by the traditional international reserve currency, writes Ding Yifan.
Bi-lateral and multi-lateral Free Trade Agreements are becoming increasingly important in maximizing regional and international trade. Due to the immense size of China, South Korea and Japan’s economies, it is important that all three negotiate and develop a China-South Korea-Japan Free Trade Area. Increased trade between the three will lead to increases in the size of all of their economies.
China’s central bank will not change its monetary policy in the near future, but will rather keep a steady but tight policy to get both credit and monetary growth back on track. This could be the keynote of China central bank monetary policy for 2014, writes Yi XIanrong.
Many Latin American countries have experienced record levels of growth in the last decade due to high prices of commodities, however, few planned for the future. As China slows and US desire for petroleum lessens, the economies of many Latin American countries that have failed to diversify their economies away from a single commodity are slowing drastically.
The crisis in Ukraine is geopolitically important for the US; however, it will not derail the US “pivot” to Asia-Pacific. The US will continue to “pivot” towards Asia-Pacific through increased troop deployments, an increased role in conflict mediation, as well as through the promotion of stronger regional alliances in an attempt to contain a growing China.