Let’s recognize China is clutch, not engine, of integrated global economy

By Liu Zhiqin Source:Global Times Published: 2014-3-6 19:33:01

At the recent G20 Finance Ministers and Central Bank Governors Meeting, many attendees asked China to make a bigger contribution to world economic growth and help enhance the momentum of economic development in other countries.

Over the past decades, the rest of the world has been enjoying the benefits provided by fast economic growth of China. China has been crowned as the engine of the world economy, and we are frankly proud of it.

Obviously it is true that China played its role as engine of the world economy. In 2013, China contributed 30 percent to the total increase of world economic growth. China has sacrificed its environment and paid the costs of overcapacity.

Now time is changing, and it's a good time for China to cool its engine and review our own function and role.

Who we are? Are we really the engine of the world economy as many Western experts have said?

We must have the wisdom of self-recognition. Identifying our purpose and role is more important than promising a bigger contribution to the global economy.

If we look at the facts, the whole global economic community has been divided into three different groups with different functions. If we take the whole global economy as a car, all countries could be characterized as "engine" countries, "clutch" countries and "accelerator" countries.

There is no doubt that the US and most of the EU countries, as well as Canada, Japan and Australia are engines, because their demands and consumption are the main force to push countries like China to produce more goods. That's why China has become the largest trading partner of most of these countries.

We have to realize that demand is the key factor of economic development, and consumption is the driving power of economic growth. If there were no purchase orders from these countries, China would not have had the dynamics to build up its manufacturing base and have exported such a  huge amount of goods to these countries, even over-producing steel and other capital goods. We have to be honest and say that only demand itself is the decisive engine of the market.

So China is not the engine of the world economy, and China cannot act as a single-cylinder engine to drive the whole global economy without high demands from the developed countries. Exports to developed countries contribute more than 60 percent of total export volume.

It is better to label China and other BRICS countries as clutches, in that their development can influence the speed and quality of other countries' development. Of course China also has great demands for natural resources such as gas and oil, but these demands have mainly taken place in a few BRICS countries, not in the developed world.

Other Asian and African countries have played a very important role as accelerators that will push forward or slow down the development of all engine and clutch countries. No one should disregard this group, which could carry the world economy into a bright future or cast it into darkness.

Although all the three kinds of countries have their own functions, they form the main members of the global economic family.

Only when all members of the family are united with one common purpose and the engine, clutch and accelerator work smoothly together, can the car of the world economy run on the highway of growth safely, thus bringing the world to a smooth, stable and satisfying future.

Any conflict among countries in the three groups will push the world into disaster.

The author is a senior fellow of Chongyang Institute for Financial Studies of Renmin University. opinion@globaltimes.com.cn



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