The World Economic Forum (WEF) 2022 Annual Meeting has just concluded in Davos, Switzerland, and many countries are easing their Covid-19 restrictions. Themed “Working Together, Restoring Trust,” the meeting discussed topics including pandemic recovery, tackling climate change and improving the future for work. Its theme and topics are all of great practical significance. At present, the world faces an array of shared post-pandemic challenges which place demands on nations to increase their mutual trust and cooperation. Cooperation and competition are two sides of the same coin. How China should better position itself in the midst of the ongoing global economic changes has become a matter of great concern for its public.
In the first quarter of 2022, global economic growth slowed, and financial market volatility heightened, due to Covid-19 outbreaks, intensifying geopolitical conflict and tightening monetary policies in developed economies. Last month, the International Monetary Fund, Organization for Economic Co-operation and Development, World Bank and other international institutions slashed their forecasts for global economic growth in 2022. The Institute of International Finance also halved its forecast, to 2.3 percent, recently. But the global economic picture is patchy. The developed world has seen inflation surge after an unusual economic boom, with unemployment at a relatively low level. By contrast, quite a few developing countries are facing daunting challenges, including rising inflation and capital outflows. The global economic recovery is uneven, and the outlook even more complex.
China, too, is facing a grim economic situation. In recent days, multiple omicron outbreaks in China have weighed heavily on both the supply and demand sides of the economy. Downward economic pressure has continued to increase, leaving many enterprises’ operations struggling and unemployment, especially among the young people, rising. So stabilizing economic growth must be the top priority. In the executive meeting of the State Council and national teleconference on stabilizing the overall economy, the central authorities repeatedly stressed the need to “get the economy back on its normal track and maintain major economic indicators within an appropriate range” and to “place steady growth in a more prominent position,” introducing a package of economic stabilization policies including 33 measures in six areas. The current economic situation should be clearly explained to the public, covering both its potential and difficulties; this is the basis of correct policymaking and effective policy implementation.
As the second-largest economy worldwide, China has contributed around 30 percent of global economic growth in recent years. Chinese economic activity within an appropriate range will provide a boost to the global economy’s post-epidemic recovery. The reverse is also true. But in the face of an imbalanced global economic recovery, China must concentrate its efforts on “doing its own thing well” by continuing to deepen reform, expand opening up and actively enhance international cooperation, as it seeks better positioning in the global value chain, industrial chain and supply chain.
To “do its own thing well” is an important lesson China has learned during the rapid economic and social development of the past four decades, and has been a fundamental factor underlying China’s ability to withstand the tremendous impact of Covid-19 over the past two years. People often say that the Chinese economy is resilient, enjoying enormous potential and vast room for maneuver. That is no accident, but rather the result of decades of effort since China’s reform and opening up. Thus, whether we are considering stabilization of macroeconomic fundamentals, or coping with future global competition, China should resolutely continue to “do its own thing well.”
At present, the international community is undergoing a turbulent period, with the Russia-Ukraine conflict unlikely to end anytime soon and the pandemic changing the world’s competitive map. All eyes are on future developments in the international strategic arena. But nonetheless, the certainty that bright prospects will remain the preserve of market-oriented, law-based, globalized countries endures. The recent launch of the Indo-Pacific Economic Framework (IPEF) by the U.S. has caused deep concern in a section of the Chinese population. But, realistically, establishment of the IPEF is far from complete; its impact on the international economy and trade thus remains to be seen. And the best way to avoid isolation is to have active, deep integration into the global economic system.
What is clear, however, are signs that Chinese industries are moving to Southeast Asian countries more quickly than before. So China must comply with the laws of industrial development, improve its domestic enterprises’ competitiveness, and enhance its domestic market’s attractiveness to foreign investors. As for the future form of international supply chains, this will ultimately be determined by market forces, not politicians. Currently, the No. 1 priority of all levels of Chinese government is the coordination of epidemic prevention and control with economic and social development, and the avoidance of an excessively narrow focus or adoption of one-size-fits-all approaches. To do otherwise is equivalent to simply presenting global market share to other countries on a silver platter.
To “do its own thing well,” China must continue to deepen reform and opening up, and modernization of governance systems and capabilities. It should further ease market access, set out transparent, stable and predictable regulations, create business environments satisfactory to both local and foreign businesses, continue to expand institutional opening up and make active efforts to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. On the 70th anniversary of the founding of the China Council for the Promotion of International Trade, Chinese President Xi Jinping reiterated that “China’s resolve for a high standard of opening up has not faltered, China’s door to the world will only open wider still.” We hope that through this door, increased exchanges of talent, logistics, capital and information between China and the outside world will occur.
“Doing its own thing well” does not mean ceasing cooperation with other countries. At times of intense geopolitical tension and economic divergence, international cooperation and policy coordination remain imperative. Reassuringly, U.S. climate envoy John Kerry and China’s special climate envoy Xie Zhenhua have met nearly 40 times online and offline since taking office. “We meet once every eight to nine days,” Xie told us. At this WEF, in response to Caixin’s question concerning his thoughts on outsiders’ view of China-U.S. climate cooperation as a vehicle for optimizing the two nations’ overall relationship, Kerry cast the climate crisis as a global problem. “Climate is not a bilateral issue for the U.S. and China; climate is a multilateral, universal and existential issue for everyone,” and climate issues shouldn’t bear political labels, he said. Chinese and U.S. officials should seek the same commitment and broad-mindedness on other issues. And all countries should seek further common ground, based on humanity’s shared values of peace, development, equity, justice, democracy and freedom.
Whether a country ultimately finds itself better placed amidst the divergent global economic recovery and changing international landscape will depend upon the responses adopted by its government, on competition between systems and mechanisms, and on their long-term impacts. For China, adhering to reform and opening up and “doing its own thing well” remains the sole correct choice. But knowing what to “do well” and how to “do it well” will still be critical.
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