Why China can keep playing the role of global economic engine

Editor's note: China has advanced a broader agenda of opening up across more areas and in greater depth, and promoted Chinese modernization with high-quality development. As the world is entangled by economic downturn, can China continue to play the role of global economic engine? Fred Hu, founder and chairman of Primavera Capital Group, shared his thoughts in an address to the Understanding China Conference hosted by the China Institute for Innovation and Development Strategy. The views expressed in the video are his own and not necessarily those of CGTN.

After a golden era of low inflation and high growth for more than 40 years, the global economy has taken a turn, entering a new era of high inflation and low growth. Amid the uncertainties of the global economic downturn, can China continue to play the role of the global economic engine?

Since the reform and opening-up, China's GDP has experienced sustained high growth for over four decades. China has much greater economic strength and plays an increasingly important role in the world economy. In 2021, China's GDP accounted for 18.5 percent of the world's total, far higher than 7.7 percent in 2001. The added value of China's manufacturing accounts for nearly 30 percent of the global total, cementing its status as the world's leading manufacturing powerhouse.

IMF data shows that in 2023, China's economic growth rate will make up 30 percent of the global total, and China's contribution to global growth will be more than three times that of the United States. All of these underscore the positive and significant influence of China's economic development on the global economy.

China is taking steady steps to open up to the world at a high standard. It has become the main trading partner of more than 140 countries and regions. China's position as the world's largest goods trading country has been further solidified.

As a responsible major country, China actively opens up its domestic market, and opposes trade protectionism and beggar-thy-neighbor policies. China continues to closely cooperate with countries at all levels in the global value chain, and promotes the recovery and growth of the world economy.

As the world's second largest economy, China's steady and rapid economic growth not only provides momentum for its own sustained healthy development but also holds significant implications for promoting regional economic and trade cooperation and global economic prosperity.

China's position in the global trade system continues to rise, which is not only due to its large population, vast territory and massive economy, but more importantly, due to China's favorable business environment and institutional arrangements established through trade agreements with trade partners.

China's strategy of sustained opening-up has increased the confidence of international businesses to make long-term investments in China. This creates more stable and sustainable trade and investment relationships, allowing the market to play a more decisive role in resource allocation, while reducing the potential negative impact brought about by geopolitical uncertainties.

China's pursuit of high-quality development goes hand in hand with technological innovation. In recent years, China has gradually shifted from low-cost, low-end manufacturing to an increasingly advanced, innovation-driven economy, relying on the improvement of total factor productivity to promote economic growth. In terms of scientific and technological research and development, China has made significant progress in both financial input and academic output.

Finally, it is equally important to note that high-quality development involves a continuous push towards low-carbon and environmentally-friendly practices, with the aim of achieving net-zero emission as soon as possible. In doing so, China can play a leading role in addressing the climate crisis. It is encouraging that China's investment in energy transition is already leading the world.

In the future, China should continue to promote green tech innovation, offer strong support to decarbonization and green finance, rapidly increase the share of renewable energy, and complete the energy transition as soon as possible. This will further cement China's role as a global leader in climate change action, promote sustainable development of the world, and pave the way for a more harmonious, healthier and brighter future for mankind and nature.

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