China's Economic Growth and Its World

Influence

In a report issued at the end 2003, Stephen Roach, chief economist of Morgan Stanley, noted that when American consumers were feeling continuous pressures, the low-cost goods from China helped enlarge the domestic purchasing power of the United States. In this regard, China might have played a key role in the soft landing of the US commercial cycle. Simultaneously, American companies have benefited from their purchase in China. The imported parts from China have lowered their cost, thereby increasing their profits. For American business circles and investors, this has enhanced the overall competitiveness of the United States.

China has witnessed sustained and rapid economic growth and a good situation in the balance of international payments and foreign exchange earnings, in spite of global economic recession. Some overseas personages worry that the increasing share taken by China's exports in the international market may blunt the competitive edge of other countries' exports, thereby adversely affecting their economic growth. Some people even claim that China is exporting deflation to the world through dumping huge amounts of low-priced commodities in the international market. Bu the fact is that China's exports take up only a small proportion of developed countries' GDP. Moreover, processing trade exports make up more than a half of China's total exports. Chinese enterprises, mainly taking processing fees from this kind of exports, have no power to set prices for final products, and therefore can hardly affect the price levels of importers. It’s obviously that that viewed from various aspects, the sustained and rapid economic growth of China, a developing country with a huge population, is conducive to the economic development of its neighbors and the world at large.

First, China's labor cost is low. The low price of China's export commodities can enhance the real income level of the people of importing countries, stimulate the growth of consumption in other fields and propel the economic growth of these countries.