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Economic Growth in China in 2020 from the Perspective of Ming Yi Gua

Feb 24, 2021
  • Su Jingxiang

    Fellow, China Institutes for Contemporary International Relations

According to the Change Calculation Table of the Sixty-Four Hexagrams in Supreme Principles That Rule the World (Huangji Jingshi Shu,《皇极经世书》) by Shao Yong (1011-1077) of the Northern Song Dynasty, the hexagram for the year 2020 is the Ming Yi Gua: the sun goes down and the light darkens. In other words, the forces of darkness are strong and powerful, making unreasonable and desperate attacks on the light. Huang Zongxi (1610-1695), a renowned literary leader in the late Ming and early Qing dynasties, borrowed the idea of Ming Yi Gua and wrote his famous book: Waiting for the Dawn (Mingyi Daifanglu,《明夷待访录》). The book contains ardent hopes for future wise rulers to realize good governance, get rid of the darkness, and revive the light. 

The year 2020 witnessed the dangers predicted in the Ming Yi Gua. In the first half of the year, the COVID-19 pandemic broke out and the U.S. continued without slackening its offensives against China in trade, technology, investment and other areas, driving the Chinese economy to a critical state of danger. By the end of 2020, it was clear that the Chinese economy had withstood the severe test and passed through the darkness of adversity. 

‘Over the past year, under the strong leadership of the CPC Central Committee with comrade Xi Jinping as the core, China has become the world’s only major economy with positive economic growth despite the severe and complex domestic and international situation and the heavy impact of COVID-19,’ concluded a report released by the State Council Information Office on January 14th. 

According to Chinese government statistics, the Chinese economy grew 2.3 percent in 2020, mainly driven by export and investment. The COVID-19 pandemic drove down the income of residents and overall consumption growth remained negative. Although the economic growth rate in 2020 was the slowest for China in more than 40 years, given the serious downturn in the world economy in general and the deep recession in developed economies, such as the U.S. and Western Europe in particular, it is an extremely valuable achievement and serves as a breakthrough with strategic significance. The World Bank forecasts that the Chinese economy will grow by 7.9% in 2021, and the IMF forecast is 8.2%. If these forecasts hold true, China will remain the fastest growing major economy. 

While the world economy is made up of national economies, it’s not a simple system. It is a complex organic system reflecting the level of importance of interconnections and cooperation among different regions, countries, and ethnic groups. In 2020, China’s merchandise exports grew by 4%, imports fell by 0.7%, and total exports and imports grew by 3.3%, making it the only country in the world to maintain trade growth. China’s contribution to global exports, at 16 per cent, has been the highest in the past few years and reflects the country’s place in the world. 

Trade between China and the 10 ASEAN countries grew by 6.7 percent to USD 685 billion in 2020, making ASEAN China’s largest trading partner for the first time, ahead of the European Union. China attaches great importance to its economic ties, political relations, and strategic climate with Southeast Asian countries. Statistics show that China’s trade with Vietnam increased by a surprising 19% in 2020. At the end of 2020, China signed the Regional Comprehensive Economic Partnership Agreement (RCEP) with ASEAN, Japan, ROK and other countries, once again showing that the U.S. strategy of encircling China in East Asia is unrealistic. Who represents the future of Asia? Is it the U.S. or China? 

Our global future depends on the union between Europe and Asia. China’s trade with the European Union grew 4.9 percent to U.S.D 649.5 billion in 2020. In terms of the world economy, geopolitics, and international security, the negotiation of the China-E.U. Comprehensive Agreement on Investment (CAI) was completed at the end of 2020 is enormously strategic. It will not just be an economic agreement but will also be a new blueprint for an economically integrated Eurasian community of the shared future. In the long run, countries on the Eurasian periphery will be able to break away from the oppression of American hegemony by joining this community. 

China’s trade with the U.S. jumped 8.3 percent to USD 586.7 billion in 2020 in spite of the trade war and the COVID-19 pandemic. The U.S. has gone from industrial capitalism to financial capitalism and is now a so-called “post-industrial society.” Since 2008, the U.S. government has spent 36.9 trillion dollars to stimulate the economy, but the GDP has grown by just 2.92 trillion accumulatively, or 1 dollar in GDP growth for every 12,670 borrowed in treasury bonds. The Federal Reserve has provided 16 trillion dollars in bailouts and subsidies to Wall Street banks at virtually zero interest rates. Banks and big companies have used the money to repurchase stocks and boost managers’ pay and bonuses, creating the largest upward wealth transfer in American history. 

The U.S. economy was in deep recession in 2020, with thousands of SMEs going bankrupt and millions of workers losing their jobs and in heavy debt. However, the stock market grew markedly, and wealth became more concentrated among the top twentieth percent, further exacerbating social inequality. Excluding agriculture, real estate, and high-tech industries closely related to the military, most industries in the U.S. have seriously degraded, lost international competitiveness, or even completely disappeared. The country has to import many products vital to people’s livelihood. To a certain extent, the Chinese and American economies have developed into two very different systems, which are more complementary than competitive.

The Ming Yi Gua discusses the basic principles for passing through darkness and protecting the light. The performance of the Chinese economy in 2020 has proved that the country’s development path and philosophy are promising and bright. In contrast, the American financial capitalism is unsustainable, will lead to darkness, and should be avoided.

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