The New Year brings both uncertainty and opportunity for China's economy

China Plus Published: 2019-01-03 18:00:32
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Note: The following is an edited translation of an article from the Chinese-language "Commentaries on International Affairs."

Looking back over the past year, China's President Xi Jinping said in his New Year message that "2018 has been a full year, and we approached it with steadfast determination", and that "China's sincerity and goodwill for maintaining world peace and promoting common development will not change." China has not only steadily advanced its own program of national reforms, but also worked to promote common development around the world.

China's economic powerhouse of Shenzhen. [Photo: VCG]

China's economic powerhouse of Shenzhen. [Photo: VCG]

In 2018, China launched a series of reform and opening up measures, such as substantial reductions of tariffs and a cutback in the number of industries closed to foreign investment. It has also strengthened its intellectual property protections. According to a recent World Intellectual Property Organization (WIPO) report, China had the world's largest number of domestic patents, trademarks, industrial designs and other intellectual property applications lodged in 2017, and the organization's Director General Francis Gurry said China has become one of the world's leading innovators. China's Supreme Court recently established an intellectual property court, which is further good news for both domestic and overseas investors.

The background to these measures is that China's reforms are entering what is called the 'deep-water zone'. From a domestic perspective, the economy still faces challenges. According to the latest data, the official purchasing managers' index (PMI) of China's manufacturing industry fell to 49.4 in December from 50.0 in November – in other words, it has fallen into the red. But the service industry is in good condition, with its PMI up from 53.4 in November to 53.8 in December. On the one hand, China's economic transformation is steadily advancing. On the other hand, there are still signs of potential problems ahead.

Although China is still a developing country in terms of per capita GDP, the size of its economy overall makes it second only to the United States. And in keeping with the responsibilities that come with playing a major role in the world economy, China has contributed to the maintenance of the global multilateral trading system. Last year saw populism, protectionism, and unilateralism on the rise in parts of the world, carried along by a growing countercurrent against globalization. Although the trade frictions between China and the United States have eased somewhat, there is still much to be done. And China's new measures to reform and open its economy will further ease tensions between the world's two largest economies, and also contribute more broadly to growth and development worldwide.

Looking ahead, negotiators from China and the United States are expected to meet for talks in the first half of January. A meaningful agreement would benefit their national economies, and help stabilize their wider diplomatic relationship. Of course, there is uncertainty as to what the outcome of the negotiations might be. But what is known is that success will depend on both sides focusing on their long-term interests, not short-term point scoring.

Whatever the outcome, China will carry on deepening the reform of its economy, and becoming increasingly open to the world. As the history of China's 40 years of reform and opening up has shown, every time China encounters a major challenge, it has always responded by pushing ahead with more reform rather than a retreat into seclusion.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.