According to a recent The Economist article, this year, for the first time, China is contributing more to global GDP growth (measured at market exchange rates) than the United States. China and other emerging economies have become powerful new engines to balance the world economy when America is facing a risk of recession.
When I was traveling in China, I could see there is a lot of optimism and confidence in people everywhere about China’s future. Although they are worried about their children’s education, social security, etc. in general, people believe China is going to get better. Even the economists don’t see many threats to cause China’s economy to collapse in the near future.
Interestingly enough, as the article indicates, “China is one of the few parts of the world without a housing bubble.” Although housing prices have increased several fold, the article says, “the ratio of house prices to average income has fallen by 25% in China since 1999.” This explains why some people I interviewed own more than one apartment, and some still want to buy more.
Here is another picture of a Chinese middle class family:
The article also discusses the other myths about China such as export-led growth and increased labor cost. There are indications that a growing middle class is driving domestic consumption, in spite of their high savings; and labor productivity has increased faster than the rise of average wages.
This is a photo of the neighborhood of my parents’ home. Five years ago, it was packed with bicycles. But now, it’s parked with cars.
The article goes on to say that China’s long term prospects are strong because its economic success has been based on high savings, openness to trade, good education and strong productivity. “As China has grown, it has come to matter much more to the rest of the world.” China is now a force for stabilizing the world economy and it’s good for the world.