How China's reform and opening up drives the global economy at 45

China's historic reform and opening up, initiated by Deng Xiaoping in 1978, has not only transformed the nation into a global economic powerhouse but also played a pivotal role in fostering worldwide economic growth. Over the past decades, the country's commitment to liberalizing its economy has significantly enhanced global trade and foreign investment. As a result of the reform policies, China has not only lifted hundreds of millions of its people out of poverty, but also became a reliable engine that drives the global economy.

In the last two decades, China has experienced consistent and rapid economic growth. From 2012 to 2021, China's GDP grew from 53.9 trillion yuan (about $7.61 trillion) to 114.4 trillion yuan. From 2013 to 2021, it grew at an average annual rate of 6.6 percent, beating the global level of 2.6 percent. Data from the World Bank showed that during this period, China's contribution to global economic growth averaged 38.6 percent, higher than that of the Group of Seven countries combined.

Meanwhile, China has also witnessed a decline of 147 million in the impoverished population (individuals with a daily living cost below $1). This reduction constitutes 84.5 percent of the total decrease in the poverty-stricken population across the East Asian region.

One key factor that has propelled China's economic "miracle" – as the country's economic progress has been referred to – is foreign direct investment (FDI) which has surged over the years. The influx of foreign capital has spurred innovation and technological advancements, benefiting both domestic and international markets.

In 1980, four Special Economic Zones (SEZs) were established in the coastal cities of Shenzhen, Zhuhai, Shantou, and Xiamen as testing grounds for China's new economic policies. Since then, they have helped guide the development of the country's economy while attracting significant foreign investment due to favorable policies that they enjoy, such as tax incentives, reduced regulations, and infrastructure support.

One of the profound effects of China's reform is the dramatic increase in its middle class and, consequently, its consumption power. As millions of Chinese citizens entered the middle-income bracket, there has been a surge in demand for high-quality goods and services. This rising consumer class has not only fueled domestic economic growth, but also provided a lucrative market for international businesses. Major global companies now tailor their products and marketing strategies to cater to Chinese consumers, further integrating China into the global economic landscape.

By 2030, it may be home to about 400 million households with upper-middle and higher incomes – roughly as many as in Europe and the United States combined, according to consulting firm McKinsey. Over the next five years, it is estimated that the number of millionaires in China may double, from around five million today to ten million in 2025, the firm says.

China's commitment to showcasing its economic prowess and fostering international cooperation is evident in the numerous expositions it hosts. Events like the China International Import Expo (CIIE) and the China Import and Export Fair (Canton Fair) serve as platforms for countries and businesses worldwide to connect and explore opportunities. These expositions facilitate trade negotiations, technology transfers and cultural exchanges, fostering a collaborative global economic environment.

According to the International Monetary Fund (IMF), China is poised to become the biggest growth driver of the world economy over the next five years and will double the contribution made by the U.S. in this period. Based on Bloomberg calculations from data in the IMF's World Economic Outlook released earlier this year, China's slice of global gross domestic product expansion will be at 22.6 percent, India's will be 12.9 percent, and the U.S. will add 11.3 percent.

The Belt and Road Initiative (BRI), launched in 2013, stands as a testament to China's commitment to global economic connectivity. The ambitious infrastructure project aims to enhance trade and investment between China and participating countries, fostering economic development and cooperation. The BRI has led to the construction of ports, railways, and other critical infrastructure, connecting economies and creating new trade routes.

By investing in the development of infrastructure projects, China has not only spurred economic growth in participating countries, but also created opportunities for businesses globally.