‘China’s new economic plan provides lessons for Nigeria’
Liu Kan is the Consul General of China in Lagos. In this interview with FEMI ADEKOYA, he talks about the Chinese economy, the ongoing reforms to address the slowdown in growth and lessons for developing economies like Nigeria in adopting global cooperation to improve production capacity. Excerpts.
As the Chinese economy now slowed down, has it affected the influence of the Chinese economy in the world economy?
China’s steady economic development has benefited the world. China contributed about 30 percent to global growth in the first half of the year. With commodity prices dropping markedly on the global market, the growth of China’s foreign trade volume is slowing down. But even so, the actual amount of commodities China imported has continued to go up. Until the end of August this year, the amount of trade between China and Nigeria reached $9 billion, the third largest in Africa. China’s outward investment has maintained rapid growth. The number of outbound tourists has notably increased. Last year alone, Chinese tourists made over 100 million trips overseas. In the first half of this year, the number rose by another 10 percent. All these serve to prove that China is not a source of risks for the world economy but a real source of strength for world economic growth.
What are the main reasons for the slowdown?
Despite the many difficulties and downward pressure, the Chinese economy is still within the reasonable range. The Chinese economy is deeply integrated into the global market. Given the weak growth of the global economy, China could not stand unaffected. Meanwhile, the deep-seated problems that have built up over the years are thrown into sharper relief. The Chinese economy is in the state of a new normal. It is going through a transition with traditional drivers being replaced by new ones. The extensive model of growth in the manufacturing sector is giving way to more intensive production. And over-reliance on investment is abandoned for greater balance between consumption and investment. This is a painful and challenging process. Ups and downs in growth are hardly avoidable, as they are natural in a period of adjustment and transition. To borrow a concept from traditional Chinese medicine, they are the “pulse” that shows the health of the economy.
Over the last two months, we have seen a slip or fluctuation in certain indicators. Yet, the policies and measures adopted in the previous stage are starting to pay off, and positive factors are building up in the economy, hence the upward trend in certain indicators. The fundamentals underpinning a stable Chinese economy have not changed. The ups and downs in the economy may have formed the shape of a curving wave, but the underlying trend remains to be positive. We will not be swayed by short-term fluctuations in economic performance, nor will we take it lightly.
What are the prospects for the Chinese economy despite the slowdown?
We believe that the Chinese economy is on the right track and its future will be even brighter. This is not unrealistic optimism. Our confidence is based on the sound foundation, condition and momentum of economic growth. The Chinese economy is resilient and full of potential. China is going through the process of a new type of industrialization, IT application, urbanization and agricultural modernization, which all serve to generate strong domestic demand. China has a vast territory and diverse industries. That means the Chinese economy is supported not by a single pillar but multiple pillars. It is highly resilient and shock-resistant.
Meanwhile, we are comprehensively deepening reform, accelerating structural reform and pursuing an innovation-driven development strategy to fully unleash the potential of economic growth. We want to make sure that the economy maintains a medium-high speed of growth and moves to the medium-high level of development.
What is your assessment of the macroeconomic situation in China?
At the moment, global economic recovery is still weak. Many international institutions have downgraded their global economic forecast. The more complex and intricate the situation, the more we need confidence and hope. My message is this: despite the moderation in speed, the performance of the Chinese economy is stable and moving in a positive direction. Although difficulties remain, there are more opportunities than challenges.
Chinese government is capable of meeting the main goals and tasks set for economic and social development this year, and this will lay a solid foundation for sustainable growth in the years to come. Given the slowdown in global growth, the 7 percent growth China achieved in the first half of the year is not at all easy. Because we are talking about a US$ 10 trillion economy, for which 7 percent growth actually generates more increase in volume than the double-digit growth in the past. And the 7 percent growth is in fact among the highest of the world’s major economies. What is more encouraging is that China’s economic structure is rapidly improving. Today, the services sector already accounts for half of China’s GDP, and consumption contributes 60 percent to growth. Growth in high-tech industries is notably higher than the entire industrial sector. Consumer demands for information, cultural, health and tourism products are booming. Energy conservation, environmental protection and the green economy are thriving. New economic growth areas are rapidly taking shape.
Does China have any new idea to strengthen international economic cooperation?
China has come up with the initiatives to build the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and to promote global cooperation on production capacity. We believe these initiatives could help further open up our country and forge a more balanced and inclusive global industrial chain. This in turn could pool the comparative strengths of all countries and foster a global community of common interests and development for win-win, inclusive and common progress.
Global cooperation on production capacity remains appealing. What is your opinion on this issue?
Countries are at different stages of development. Global cooperation on production capacity will match supply with demand effectively, and generate more demands through innovation on the supply side. As developing countries accelerate industrialization and urbanization, they now have a strong demand for applicable technologies, equipment and infrastructure. Many middle-income countries and developed countries also need to upgrade their equipment and infrastructure. However, constrained by funding shortage, some demands have been repressed. Talking about comparative strengths, developed countries have advanced key technologies and e.quipment, but the demand for their products and equipment is limited due to high prices. Developing countries may enjoy rich natural resources and low labour costs, yet most of their industries and products are at the low end. And as far as China is concerned, it has manufacturing capacity for quality and affordable mid-end equipment, strong engineering and service capabilities, and large foreign exchange reserves. What China needs is to transform and upgrade its industries.
Three-party cooperation could combine our comparative strengths, and provide quality equipment and products with relatively low prices to bring down construction costs and better meet the needs of different countries. It will also help countries overcome the difficulties in industrial development, upgrade their industries and integrate the high-, mid- and low-ends of the global industrial chain. This will help businesses increase their presence in both the international and Chinese markets. Like a convex lens that makes rays converge, such a cooperation model brings together the supplies and demands of various parties and converges their interests. It could be a new driver to sustain a steady growth of the global economy.
We live in the same globalized world. Like passengers riding in the same boat, we all have a stake in each other’s future. China is committed to peaceful development and a win-win strategy of opening-up. We will work with all countries including Nigeria to promote inclusive and balanced growth and green and sustainable development. Together, we could build a community of common interests and development and create an even better future for Chinese as well as Nigerian People.
Besides the measures of reform, what are the sources of new driving force for Chinese economic growth?
Last year, Chinese government firmly encourages “Mass Entrepreneurship and Innovation”. This, in fact, makes a major part of China’s ongoing structural reform and adjustment. Measures have been taken to streamline administration, delegate government power, strengthen regulation and improve services. Steps have also been taken to cut taxes and fees for small and micro enterprises, establish investment funds to guide entrepreneurship, and promote the “Internet +” and “Made in China 2025” strategies. Consequently, the people’s creativity and entrepreneurial passion have been unlocked, and a massive wave of entrepreneurship and innovation is sweeping across the country. Those involved include both people at the grass-roots and high-calibre professionals, from college graduates, migrant workers and returned overseas students to researchers, technical experts and senior managers.
There are various platforms for entrepreneurship and innovation, which attracts both small and micro companies as well as big corporations. Platforms such as crowd innovation, crowd outsourcing, crowd support and crowdfunding have been set up, changing the way of production and management. It allows employees within the company to get rewards in addition to their salary by sharing their creative ideas on-line. It also gives opportunity to makers outside the company to take part in innovation and share the benefits. As a result, a large group of micro businesses have been incubated, and collaborations among research institutions through the Internet have made their innovation more efficient.
“Mass entrepreneurship and innovation” is a strong power driving development. The creativity of the people is the greatest asset for development. China has a labour force of 900 million and over 7 million people graduate from college every year, with more and more of them joining the ranks of entrepreneurship and innovation. This has led to new supply and demand, and could well count as a major factor in keeping growth stable. Mass entrepreneurship and innovation means more employment. Though growth is moderating, more jobs are being created because new market entities keep emerging. Measures to streamline administration, delegate government power and reform the business system have enabled new businesses to get started. For the past one and a half year, over 10,000 new businesses have been registered on a daily basis in China, and the momentum is still growing, creating a lot of jobs in the process. Mass entrepreneurship and innovation gives impetus to developing a sharing economy.
What are the instances of the “Mass Entrepreneurship and Innovation”?
In Dalian, China, a company employs only ten people but has built an impressive business in just two years. It has attracted 280,000 registered engineers through the Internet and collected data of some 30,000 machine tools in northeast China. It has managed to link the machine tools with consumers on the demand side to improve the utilization rate of these machine tools. More importantly, building on the wisdom of its 280,000 registered engineers, it has offered smart solutions for upgrading machine tools and developed nearly 100 products.
The company has an ambitious plan — to not just upgrade the old machine tools, but also build new and smarter ones by pooling wisdom via a public platform. In fact, one could find tens of thousands of small companies like this in China, whose creativity is beyond our imagination. Whether they succeed in the end, they are all like the new champions. Through them, people see the future of our economy, and I believe they are all part of the new blueprint for growth in China and beyond.)