By Wang Hai
There are more and more people out there wondering the same question: why massive changes happened in China in such a short period? How the country is changing itself and, to some degree, the whole world?
We live in fast-moving times and an increasingly interconnected world. Globalisation has reached new heights in the 21st century. Together with new technology, it has brought enormous benefits to many, but these gains have not been distributed evenly, which has been a source of discontent and the cause of recent backlashes against the very processes of globalization.
Pressing global issues call for global efforts. What can China offer to the cause of promoting inclusive growth? Here are some highlights of China’s new initiatives in the fields of ideas, institutions and infrastructure.
The rationale behind the Asian Infrastructure Investment Bank (AIIB) aligns with this logic. As a multilateral development bank (MDB), proposed by China in 2013 and launched in 2015, the AIIB aims to bring states, or sovereign money, together to address the daunting infrastructure shortfalls across Asia and beyond.
Asia alone needs to invest $1.7 trillion in infrastructure each year until 2030 to maintain climate-resilient growth momentum, according to the Asian Development Bank. As a complement to—not a substitute for—existing international financial institutions, the AIIB currently has an approved (and still-growing) membership of 84 countries from all continents, making it one of the world’s largest MDBs.
All AIIB members have signed the Paris climate accord, and the bank has an energy strategy that prioritises investment in renewable energy and increased energy efficiency. Pledging to be “lean, clean and green”, and with its projects also open to private investment, the AIIB has great potential in the area of scaling up financing for inclusive and sustainable development in the fastest-growing regions of the world.
As another example of institution-building and commitment to green development, China has rolled out a nationwide carbon-trading scheme that makes it by far the largest carbon-trading market in the world.
China’s market-oriented reforms mark their 40th anniversary in 2018. In the past four decades, the country’s economic growth has been astonishing, lifting some 700m people out of poverty. China’s GDP per person was about $150 in 1978. Today, it is close to $9,000, and projected to reach $12,700—the threshold for a high-income country—around 2025. China overtook Japan as the world’s second-largest economy in 2009, and became the world’s largest trading nation in 2013.
China’s rapid rise from being an agrarian backwater in the 20th century to a global power in the 21st presents lessons for other developing countries, if only because many of them now occupy the same stage of development that China did half a century ago.
To sustain growth, the role of the state and the role of the market are important, but neither should be taken to extreme. The market and the rule of law need to go hand in hand, but both need time to be nurtured and develop. A successful reform strategy is thus often a delicate matter of sequencing and balancing. When either the sequencing or the balancing goes awry, it stifles progress, as the experiences, successes and failures of many transitional economies have amply demonstrated.
Just as China has learned and achieved a great deal during the globalisation of the last 40 years without merely reproducing models and systems from the rest of the world, China’s intention is not for other developing countries to directly replicate the structures that have brought about its success.
If strategies for economic growth are to succeed, they must, with clear visions and principled pragmatism, also reflect local conditions and be tailored to different stages of development in different countries and regions.