In a recent speech given by Chinese President, Xi Jinping titled, “Rising to
the Challenges and Building a Bright Future Through Cooperation” at the
opening of the Boao Forum for Asia Annual Conference, we get a glimpse
of the development attitude and attitude towards global co-operation and
recovery. When we look at this speech juxtaposed to the recently
released Chinese economic indicators for the first quarter of 2022 we
have a clearer picture of the kind of economic powerhouse and partner
China is and is becoming.
The world over is inundated with efforts driven by the need to rebuild their
economies in order to respond to the very real development needs of their
people. There have been very few, if any, pictures of the kind of model
economic growth and recovery that has been enjoyed by China. We would
do well to draw some lessons on how they have been able to achieve
such sustained and incremental growth. In his speech, President Xi
emphasised that China, “should follow a people-centred approach and
place development and peoples well-being high on the agenda”. There
was also a emphasis on developing practical cooperation in key areas
such as poverty reduction, food security, development financing and
industrialisation. This will ensure that China plays a critical role in
addressing uneven development and promote the implementation of the
Global Development Initiative.
I recently read somewhere that there are three kinds of people; Those
that want things to happen to/for them, those that make things happen
and those that ask, “What happened?”. The same can be said about
countries. Recent economic statistics seem to indicate China as one of
those countries that are making things happen, taking strategic well
placed steps along the road to full economic recovery centred around
improving the conditions of the people of China in the short, medium and
long run. Relative to our own domestic conditions can learn a thing or two.
There are a few key economic indicators that are central in telling the
Chinese recovery story. Here are a few key indicators;
China's gross domestic product grew 4.8 percent year on year to 27.02
trillion yuan in the first three months, quickening from a 4-percent increase
in the fourth quarter last year. This was largely due to a delicate balance
of pandemic control and easing of economic and social development
stimuli. This is a balancing act that has proven to be quite complex for
many countries around the world. In this regard, President Xi emphasised
that it was essential that countries support each other, better coordinate
response measures and improve global public health governance. We
need to improve international synergy on the pandemic and ensure that
we keep COVID vaccines as a public good in order to maintain their
accessibility and affordability.
Further reading of the data shows that value-added industrial output
posted a stable 6.5-percent increase from a year ago in the first quarter,
and fixed-asset investment jumped 9.3 percent. Retail sales of consumer
goods went up 3.3 percent. This undoubtedly had a knock on impact on
the urban unemployment rate standing at 5.5 percent in January-March,
with 2.85 million new urban jobs being created in this period.
To ensure that the growth that has been experienced is sustainable, the
Chinese government has recently announced pro-growth measures that
will help businesses and stabilize the economy. These measures include
but are not limited to, the central bank “cutting” 0.25 percentage points in
the cash amount banks must hold in reserve. This is designed to support
the real economy, as the move is expected to free up 530 billion yuan in
long-term liquidity.
Centrally administered state-owned enterprises have promised to exempt
three to six months' rent for small businesses in the service industry. Tax
authorities nationwide in March deferred 256.7 billion yuan of tax
payments for micro, small and medium enterprises in the manufacturing
sector.
To foreground the socially conscious Chinese development story, China is
proposing a Global Security Initiative which will be committed to the vision
of common, comprehensive, cooperative and sustainable security in a bid
to maintain world peace and security. This must all be done while
respecting sovereignty and territory integrity of all countries, upholding
non-interference in internal affairs and respecting the independent
choices of development paths and social systems made by people in
different countries. For this to happen there must be a rigid commitment
to the UN Charter and reject all lingering elements of a Cold War mentality
and unilateralism that are festering and permeating an environment of
intolerance and conflict. This Global Security Initiative will promote the
building of a balanced, effective and sustainable security architecture and
oppose the pursuit of individual security at the cost of others. This will
happen through a commitment to the peaceful resolution to differences
and disputes between countries through dialogue and consultation.
The next step in the development story is to ensure that all barriers to
trade are unlocked and the creation of a sustainable trade environment.
One of the ways that is proposed to do this is by creating a “white list” of
foreign trade firms and companies in the automobile, medical and other
key sectors. This done with the back drop of stimulating the already
strong growth exhibited in the automobile, medical and manufacturing
sectors. Production of new energy vehicles, solar panels and industrial
robots went up 140.8 percent, 24.3 percent and 10.2 percent, respectively.
The output of the high-tech manufacturing sector expanded 14.2 percent,
much higher than the industrial average. There will be a refocus on the
Regional Comprehensive Economic Partnership (RCEP) and the opening to
traffic of the China-Laos railway have effectively boosted institutional and
physical connectivity in the ASEAN region.
The focus on supporting the manufacturing sector is due in part to the
severity of the damage caused by the pandemic. The manufacturing
industry being a huge employer and economic contributor, the necessity to
prioritise its growth and sustainability is quite exigent. To maintain and
grow the current upward trajectory of the sector will undoubtedly
contribute much needed jobs to the economy and assist recovery. The
Chinese government has also indicated that it will prioritise micro and
small enterprises in the initiatives geared and enabling a more fluid trade
environment.
The will be an emphasis on the regional development partners, the
maintenance of peace in Asia through upholding the Five Principles of
Peaceful Coexistence and the Bandung Spirit. The will be a focus on
mutual respect, equality, mutual benefit and peaceful coexistence.
In order to stimulate the growth of the SMME sector there is a strong push
to reduce taxes and fees worth 2.5 trillion yuan this year, which will benefit
numerous enterprises, in particular small firms.
Last but not least of all the indicators we have final consumption
contributing 69.4 percent to GDP expansion in the first quarter, while
investment and exports made up 26.9 percent and 3.7 percent,
respectively.
All the above indicators show a country which seems to be proactively
involved in making things happen in the interest of its people. This would
naturally beckon a second look at our own approach to the recovery
process. Can we be comfortable with an economic recovery plan that
abdicates the role of the state to merely a referee in setting a field
favourable for private sector or should we look at, like the Chinese, having
a government that is more proactively involved in the recovery process.
One thing is for sure though- if we do not the deliberate steps needed to
really and meaningfully look at a more aggressive structural reform
program we are heading for a real crisis.
President Xi highlighted in his speech that the fundamentals of the
Chinese economy are; Strong resilience, enormous potential, vast room to
manoeuvre and long term sustainability.
There are certainly many lessons that our government in SA and other
can learn from the recovery path of China. The learning necessary
however is not a copy and paste of what China has done but to look at
the overall strategy and select those elements that may be suited to our
varying domestic conditions.
We to learn and learn quickly from our Chinese friends. What good is a
friend if we can’t learn for them and be better for it.
Buyile Matiwane is the Deputy President of the South African Students Congress.