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Dual-cycle economic model to lift future world

2020-08-18 12:52:22 China Daily

Dual-cycle economic model combines the advantages of China’s large consumer market and technological capability with the advantages of opening markets across Eurasia.

Over the past 20 years, developing countries' economies have been growing much faster than those of the traditional developed economies in Europe, North America and Japan. According to calculations by the Organization for Economic Cooperation and Development, 72 "economies identified in the Belt and Road Initiative", not including China, grew from 26.6 percent of world GDP in 2000 to 30.2 percent in 2008, and to 32.3 percent in 2017.

In the same period, the United States' share of world GDP (measured in purchasing power parity) fell from 20.6 percent in 2000 to 15.3 percent in 2017. The share of 18 richer European Union countries, not including the United Kingdom, fell from 19 percent in 2000 to 12.6 percent in 2017. In the same period, China's economy grew from 7.4 percent to 18.3 percent of world GDP.

While the developing world's consumption capability is growing fast, China's own domestic economy is changing. Decades of rapidly rising wages have created a massive consumer market. Plus, high-tech sectors and other higher value-added sectors are growing rapidly.

A likely decline in the US trade deficit is another coming shock to the world economy. A substantial part of US consumption has long been financed by international lenders through the trade deficit. It's unlikely that international lenders will continue to finance such deficits through the next decade, so US consumption is likely to grow very slowly, or even fall.

Working with international partners, China established the BRI and the Asian Infrastructure Investment Bank to push future development of the newly developing countries and to facilitate trade between them. These are big steps toward making use of the opportunities in a shifting world economy.

In a symposium with corporate leaders in July, President Xi Jinping called for greater strides in reform and opening-up, including in science and technology, while fully leveraging the strength of the nation's huge domestic market in the face of rising protectionism, a sluggish global economy and a weakening international market.