Chinese Economy in the 21st Century
By: Students Of Economics
Tags: Chinese Economy, International Relations

By Meryem Gurel

There is lots of question circling around the USA & China two giant economy became a debate in the 21st century. So this also raised other debates in the world about globalization.

Although globalization dates back to 18th century as European history, Jacob Viner (1892–1970), Paul Rosenstein-Rodan (1902–1985) are the right scholars for the existing literature of globalization mid-20th century. The taken steps of theories for the recovery of European countries led the phase of integrations for trade, tariffs, agreements, production, scale, labour, institutions, capital, finance, politics to operate the comparative advantages of countries in a unified system. In addition to that, liberal and protectionist policies were developed upon the competitiveness of international trade. There is so far to say lots of things more, globalization shouldn’t be easily taken into consideration to fit into subjects of Asia economies or vice versa. 1997 Asia Financial crisis and the 2008 Global economic crisis have rolled up China’s role in Northeast Asia because of unbalanced weak and superior states in Southeast Asia. Since then, the Chinese economy in the 21st century pursued a gradually opening up its trade and investments which drove the trends of bilateral trade agreements. This is why taking a break to go over the debates, understanding the Chinese economy is vital in this new century.

Here, my suggestion is to introduce a contemporary book written by Tim Summers “China’s Regions in an Era of Globalization” 2018, Routledge publications. Tim Summers is a lecturer at the Chinese University of Hong Kong, consulting fellow at the Asia Pacific program of Chatham house, and expert on China’s political economy, EU-China international relations and contemporary China.

Tim Summers begins with explaining the argument why China’s integration to the global economy requires understanding China’s regions rather than the national level in the introduction section. China’s socio-economic development of regions has been differentiated from inland to coastal lines regarding different geographies and histories. This situation formed a sub-national dimension as a new phase for China’s globalization. Regarding Deng Xiaoping’s economic liberalization in 1978, China establishment of economic zones on the coastal line created nation-states while inland China separated from the economy. Undeveloped inland and developed coastal regions created dynamism of China economy. China’s production and labour formed a spatial structure -conceptualized by the author as a network society of production- caused inequalities raising as a challenge of national level, a matter of political and social structure. becoming a member of the World Trade Organization (WTO) created a new phenomenon for the party and nation-states. China went outward investments by going out strategy with Belt and Road Initiative (BRI) and by establishing AIIB. The party policy and administration played an important role in the development of subnational regions in China. The national governance from the national level to town and villages gave China Communist Party (CPC) ability to manage regional policy.

From the establishment of CPC in 1949, one of the main challenges was to gain control over its territory. Due to failures of governance through inland China, CPC followed a dual approach to integrate regions to the nation. CPC strengthened coastal region with industrialization 70% planned at first and second five-year plan between 1953–1957 and 1957–1962.In between 1964–1978 The The Third Front movement which was China’s securing from Soviet created a cut-off regional policy industrializing western region rather than coastal provinces. After 1978 with Deng Xiaoping’s open-door policy structured the coastal regions with special economic zones (SEZs) where were engaged with the global economy. Operating manufacturing policies through SEZs developments in the coastal region has strengthened China’s existence in the world. The Greater Bay Area and the Pearl Delta region between Hong Kong, Macao and Guangdong provinces have been enhanced the BRI as China’s new phase integrating to the global economy. Chongqing development as a proactive and innovative city connected to Chengdu and Silk Road Economic Belt to Yangtze Delta River. The author drew the attention that globalization moves to inland China. The BRI has been a transition from the coastal region to the inland region for Chinese economic globalization.

The main strength of this book is that author discuss the main argument as China’s global integration from the regional perspective rather than a national perspective. The author supports the argument setting chapters; interaction of states between China and globalization driving from historical perspective telling how China policy shaped regions as two different parts at the 20th century started by China-Soviet split with Third Front Movement and how China will interact with global economy at the 21st century. At the 20th century, China was affected externally by east and west relations during the establishment of CPC with a hierarchical understanding of administration from nation to the village in a horizontal-vertical matrix and declared five-year economic plan with reforms to strengthen the domestic economy and to connect nations together. Thus, China got the opportunity to manage global capitalism.

At the 21st century, China followed comprehensive policy through the Greater Bay Area and Chongqing from coastal to inland aiming a huge connection by BRI through innovative technology, railways and roads reaching to Europe. China’s challenge has been economic rather than national challenge and China achieved developing key regions with innovation and governance at the municipal level. China’s regional developments are on the process for the achievement of connection to Europe. This is why China’s region becomes meaningful among BRI. The BRI vision aims cooperation with a coordinated regional policy expanding investments to create an economy and a new level of China, increasing linkages through infrastructures, and people to people connections through cultural exchanges; trade, tourism, ethnic, minority, Muslim and Arab advantages. China’s actions are influencing the strengths along the coastal regions. China’s hierarchical governance, historical periods, reforms and distinctive policies on regions and sub-nations creating an economy are the important components to understand China’s globalization with its level of engagement. The author supported the argument with data, official explanations, reports.

Thanks to Tim Summers worthful contribution, he demonstrated that there are dynamical developments within China. The changing dynamism of China has also been the changing foreign direct investments (FDI) and the government’s response through reforms. I would like to refer here a research book “China and the United States the Superpowers in the Global Economy” edited by Sedat Aybar, Shixiong Cheng, Hugh Dang, Andreja Jaklic, Jian Lu, 2018.

China’s integration to the global value chain was requiring new policies and new outward investments for capital control. This was also meant new policies for China’s domestic economy as China increased wages and consumptions to achieve income inequality and promote the transition into Trade in Services economy. Although BRI has been a key policy from inland to globalization, FDI is not found sufficient as macroeconomic highlights from the book. While China has important investments in the US, the changing dynamics affected both interdependent economies of China and the US as international trade relations and international finance, and the European Union as well. Cambridge scholar’s research book addresses from macroeconomy and policy implications by narrowing down through empirical analysis of value-added trade, financial innovations, firm-level investments, etc. Briefly, there are uncertainties about China’s economy and China’s integration to globalization, raising debates way to go.